Gold-for-Oil saved Ghana from fuel crisis – Bawumia
Former Vice President Dr Mahamudu Bawumia says the Gold-for-Oil programme saved Ghana from a major fuel and economic crisis at the height of global price shocks and cedi depreciation.
Speaking at an engagement with small-scale miners in Accra on Friday, Dr Bawumia described the policy as an unconventional intervention that prevented Ghana from suffering the fate of Sri Lanka, where forex shortages led to fuel queues and street protests.
According to him, Ghana faced a perfect storm in 2022 — external financing dried up after COVID-19 and the Russia-Ukraine war, while the IMF programme limited the Bank of Ghana to just about $80 million a month in forex intervention, far below market demand. The cedi was depreciating daily, and the country risked being unable to pay for fuel imports.
“It was then I asked, why don’t we exchange our gold for oil so that we get out of this foreign exchange problem. That was the background of Gold-for-Oil, which saved us from a major crisis. If we had not been able to pay for oil, we would have had bigger fuel shortages,” he said.
Dr Bawumia disclosed that the Gold Purchase Programme was conceived as a complementary policy. He said he wondered why Ghana, Africa’s largest gold producer, held only 8.7 tonnes of gold in reserves in 2021 while countries like the US and Germany held thousands of tonnes.
“Why should a gold-producing country export cocoa to get dollars for reserves when we can buy the gold we already produce with cedis?” he questioned.
He revealed the Bank of Ghana initially took almost a year to approve the idea because there was no precedent anywhere in Africa.
The former Vice President said the results vindicated the decision — gold reserves rose from 8.7 tonnes to 30 tonnes in two years, saving about $4.8 billion annually in forex that would have been needed for oil imports, stabilizing fuel supply, and earning commendation from the IMF.
The Gold-for-Oil policy commenced on January 15, 2023, with a first consignment of 40,000 metric tonnes of diesel valued at $40 million.
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