The Bank of Ghana (BoG) has indicated that the country has sufficient quantity of gold reserves to sustain government’s gold for Oil policy.
The Director of Financial Market at the Bank of Ghana, Stephen Opata made this known on Monday, January 16, when he appeared before the Public Accounts Committee (PAC).
According to him, there is no cause for concern as the Central Bank is well-positioned to meet the demand for 160,000 ounces of gold per month under the deal.
“As for the quantities, based on the production numbers we saw last year, gold has picked up. We believe that we can buy enough gold to sustain the program.
“I must say that the numbers we are currently looking at is about 160,000 ounces per month and that will represent about 50 to 60 percent of the consumption of the country. According to what Precious Mineral Marketing Companies indicates, I think we have volumes to support the program,” Mr. Opata said.
Background
On Monday, January 16, the first consignment of the Gold for Oil Policy by the government to stem the increasing depreciation of the cedi against the major currencies arrived at the Tema Port.
The fuel has been discharged into the receptacles of the Bulk Oil Storage and Transportation Company (BOST).
The 41,000 metric tonnes of petroleum products delivered by SCF YENISEI would be sold by BOST to bulk distributing companies (BDCs) around Ghana.
Valued at $40 million, it was brokered by the Economic Management Team led by Vice President Dr. Mahamudu Bawumia.
In November 2022, the government announced plans to buy oil products with gold rather than US dollars.
Vice President Dr. Mahamudu Bawumia, said that the move was meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which was weakening the local cedi and increasing living costs.
“It will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Dr. Bawumia said.
He added that using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products.
According to sources, the first consignment cost $40 million worth of gold.
The source said BOST would sell the product to the BDCs, proceeds paid to an escrow account at the Bank of Ghana for the procurement of gold for the process.
Other members of the team that worked for the operationalization of the move are the ministers for Energy, Lands, and Natural Resources, the Governor of the Bank of Ghana, the Chamber of Mines, the Precious Mineral Marketing Company (PMMC), and BOST.