We Have Enough Gold Reserves to Sustain “Gold for Oil Policy” – BoG

The Bank of Ghana (BoG) has said the country has enough gold reserves to sustain the government’s gold for oil policy.

Stephen Opata, the director of financial markets at the BoG, made this known when he appeared before the public accounts committee (PAC) of Parliament on Monday (16 January).

Opata said the central bank is well positioned to meet demand for 160,000 ounces of gold per month under the deal.

He said, “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 programme.

“I must say that the numbers we are currently looking at [are] about 160,000 ounces per month and that will represent about 50% to 60% of the consumption of the country.

“According to what PMMC indicates, I think we have volumes to support the programme,” Opata said.

The deal

In November 2022 the Government of Ghana, through the vice-president, announced plans to buy oil products with gold rather than US dollars.

Vice-President Mahamudu Bawumia said the gold for oil policy was meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which was weakening the cedi and increasing the cost of living.

“It will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.

He added that using gold would prevent the exchange rate from having a direct impact on fuel or utility prices, as domestic sellers would no longer need foreign exchange to import oil products.

First consignment

The first consignment of oil under the government’s gold for oil policy has arrived at Tema Port and bwen discharged into receptacles of the Bulk Oil Storage and Transportation Company (BOST).

The 41,000 metric tonnes of petroleum products, delivered by the vessel SCF YENISEI, will be sold by BOST to bulk distributing companies (BDCs) around Ghana.

Valued at US$40 million, the deal was brokered by the economic management team, led by Vice-President Bawumia.

“Mining offices”

The Precious Minerals Marketing Company (PMMC) has also signalled its readiness to establish offices in selected mining regions to enhance the trading of gold as the implementation of the gold for oil policy gains momentum.

Under the implementation, all gold from small-scale mining companies shall be sold to the government through the PMMC.

A statement issued by the company on Monday (16 January) said: “To implement the directives, PMMC shall establish offices in selected mining regions, the first of which has already been set up in Kumasi, in the Ashanti Region.

“All existing gold trading and export licence holders (‘implementing partners’) shall continue their usual business activities except that the gold so purchased by them from the small-scale sector shall not be exported. The gold purchased by the implementing partners shall be sold to PMMC,” the statement said.