The Ghana Mineworkers Union has raised concerns about the sustainability of government’s policy of trading its gold reserve for oil on the international commodity market.
The union maintains that although the idea is quite innovative, it only appears as a short-term solution to the current economic challenges confronting the country.
Government announced that it is working on a policy to buy oil products with gold as one of the solutions to halting the depreciation of the cedi.
Speaking to Citi News the General Secretary of the Ghana Mineworkers Union, Abdul Moomin, says a more sustainable measure must be put in place.
“At the end of the day, the expectation is that, if it’s a credible avenue that we can use to leverage the rising cost of petroleum products across the globe and Ghana is not an exception, I think it’s an innovative idea that could be looked at. But it all boils down to how much gold we have in store and how much we are ready to trade.
“I don’t know how sustainable that will be, because the downside obviously tells us that Ghana does not have much control when it comes to its oil,” the General Secretary of the Ghana Mineworkers Union underscored.
Gold for Oil Policy
The Vice President, Dr. Mahamudu Bawumia in November 2022, hinted at a policy to use gold to make purchases of oil on the commodity market.
Speaking at the AGI Awards night in Accra, Dr. Bawumia said this barter of sustainably mined gold for oil is key in addressing the economic crisis confronting the country.
The cedi depreciated by over 50 percent in 2022 and contributed to the high cost of fuel in Ghana.
“To address this fundamental challenge that we all face of depreciation and its impact on fuel and utility prices and food and so on, the government has opted to implement a policy of using our gold to buy oil products,” Dr. Bawumia said.
He further described it as one of the most important economic policy changes in Ghana since independence.
“If we implement it as we have envisioned, it will fundamentally change our balance of payment and significantly reduce the persistent deprecation of our currency,” he added.
The government has already directed all large-scale mining companies to sell 20 percent of all refined gold to the Bank of Ghana.
All Community Mining Schemes are also expected to sell their gold outputs to the government.
The government has also ordered small-scale miners to sell their gold to the state-owned Precious Minerals Marketing Company.