Features
Why gold for fuel
Gold for oil policy is to tackle dwindling foreign currency reserves
The economic challenges facing the country today calls for the taking of pragmatic steps to help reduce the burden on Ghanaians and make things a bit easy for the people in this country.
In doing so, it will help deal with the purchase of an essential commodity like crude oil to enable economic life to continue smoothly for the country irrespective of the serious challenges facing the entire world including our dear country.
The decision to use oil to purchase fuel for the country is a major step that shows that the leadership of this country is thinking outside the box to make life bearable even in a situation where things are extremely difficult.
The normal practice is that crude oil is imported into the country with the use of the US dollar and this is a practice that is accepted by many countries in the world.
This practice has established the US currency as an essential global commodity used to transact business among countries in the world.
For this reason, countries that are import oriented tend to put more demand for the US dollar, thereby causing a reduction in the value of the local currency which in the case of Ghana is the Cedi.
The Cedi will continue to depreciate in relation to other foreign currencies as long as undue pressure is put on the Dollar for the import of products into the country. If a reverse for this situation can be found, that is more products can be exported rather than imported, it will help the Cedi to appreciate its value against the dollar and other foreign currencies.
In the light of this, it becomes easy to understand why the leaders of this country are taking such a practical positive step to reverse the situation in this country and use one of our precious minerals, that is gold, as an exchange commodity to import crude oil.
This is why Ghana’s government, as has been pointed out already, is working on a new policy to buy oil products with gold rather than U.S. dollar reserves. This point was made by Vice-President Mahamudu Bawumia recently.
The move, he pointed out, is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.
Ghana’s Gross International Reserves stood at around $6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around $9.7 billion at the end of last year, according to the government.
If implemented as planned for the first quarter of 2023, the new policy will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency.
If Ghana for instance uses about $400 million to import crude oil every month, we can easily imagine the tremendous pressure this puts on the dollar. Thus, together with other demands for imports, the pressure on the dollar keeps escalating and this explains why the Cedi continues to depreciate, making imported products very expensive in this country.
To correct this economic imbalance, there is the need to reduce imports of foreign goods. Government has already made it clear in the 2023 budget statement that imports are to be cut down by 40 per cent.
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.
The barter of gold for oil represents a major structural change. Government is therefore right in taking this action so that the economic situation in the country can be made better for all Ghanaians.
The proposed policy is uncommon. While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite.
Ghana produces crude oil but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017. With time, the oil refinery in Tema, TOR, can be refurnished to make it workable so that arrangements can be made to refine our own oil in this country.
This means that we will have to negotiate a deal with investors in our oil exploration in the country so that the crude oil will not have to be sent out to be refined before being brought back into the country for consumption.
The policy relating to the use of gold for fuel is an innovative way of dealing with the enormous depreciation of the Cedi and thereby help in correcting the economic imbalance in the country. As much as possible, Ghanaians must support such a policy so that the entire country will benefit from this good deal.
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By Dr. Kofi Amponsah-Bediako
One of the issues we have been grappling with as a nation is corruption, and it has had such a devastating effect on our national development. I have been convinced that until morality becomes the foundation upon which our governance system is built, we can never go forward as a nation.
Our traditional practices, which have shaped our cultural beliefs, have always espoused values that have kept us along the straight and the narrow and have preserved our societies since ancient times.
These are values that frown on negative habits like stealing, cheating, greediness, selfishness, etc. Our grandparents have told us stories of societies where stealing was regarded as so shameful that offenders, when caught, have on a number of instances committed suicide.
In fact, my mother told me of a story where a man who was living in the same village as her mother (my grandmother), after having been caught stealing a neighbour’s cockerel, out of shame committed suicide on a mango tree. Those were the days that shameful acts were an abomination.
Tegare worship, a traditional spiritual worship during which the spirit possesses the Tegare Priest and begins to reveal secrets, was one of the means by which the society upheld African values in the days of my grandmother and the early childhood days of my mother.
Those were the days when the fear of being killed by Tegare prevented people from engaging in anti-social vices. These days, people sleeping with other people’s wives are not uncommon.
These wrongful behaviour was not countenanced at all by Tegare. One was likely going to lose his life on days that Tegare operates, and so unhealthy habits like coveting your neighbour’s wife was a taboo.
Stealing of other people’s farm produce, for instance, could mean certain death or incapacitation of the whole or part of the body in the full glare of everybody. People realised that there were consequences for wrongdoing, and this went a long way to motivate the society to adhere to right values.
Imagine a President being sworn into office and whoever administers the oath says, “Please say this after me: I, Mr. …., do solemnly swear by God, the spirits of my ancestors and the spirits ruling in Ghana, that should I engage in corrupt acts, may I and my family become crippled, may madness become entrenched in my family, may incurable sicknesses and diseases be my portion and that of my family, both immediate and extended.”
Can you imagine a situation where a few weeks afterwards the President goes to engage in corrupt acts and we hear of his sudden demise or incapacitation and confessing that he engaged in corrupt acts before passing or before the incapacitation—and the effect it will have on his successor? I believe we have to critically examine this option to curb corruption.
My grandmother gave me an eyewitness account of one such encounter where a woman died instantly after the Tegare Priest had revealed a wrong attitude she had displayed during the performance on one of the days scheduled for Tegare spirit manifestation.
According to her story, the Priest, after he had been possessed by the spirit, declared that for what the woman had done, he would not forgive her and that he would kill. Instantly, according to my grandmother, the lady fell down suddenly and she died—just like what happened to Ananias and his wife Sapphira in Acts Chapter 5.
NB: ‘CHANGE KOTOKA INTERNATIONAL AIRPORT TO KOFI BAAKO
By Laud Kissi-Mensah
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