Is Ghana’s “Gold for Oil” policy a wise move or a recipe for disaster?
The Ghanaian government’s “Gold for Oil” approach to solve constant fuel price hikes has come under criticism from John Jinapor, the Ranking Member on Parliament’s Mines and Energy Committee.
Jinapor argues that the move will worsen the government’s unsustainable debt burden and that gold should be valued in dollar terms as a function of currency, as is done for oil. He also warns that the deal could have a negative impact on Ghana’s finances.
The government has taken delivery of the first consignment of oil under the policy at the Tema Port and the 40,000 metric tons of oil from the United Arab Emirates will be distributed and sold to the Oil Marketing Companies, as part of the government’s efforts to reduce fuel prices and reserve the country’s forex.
However, some Ghanaians have raised concerns about the government’s ability to sustain the policy.
The Bank of Ghana has stated that the country has enough gold reserves to sustain the policy, with the Director of Financial Market at the Bank of Ghana, Stephen Opata, saying on Monday, January 16th, that the country has a sufficient quantity of gold reserves to sustain the policy.
However, Jinapor is not convinced. “I’m not a prophet of doom, but from all the documents I have read, we are heading for a debt crisis out of this so-called Gold for oil deal,” he said. He urges the government to be cautious about the move, calling it “a lazy man’s approach.”