A US-based Economic Professor and Currency expert at the Johns Hopkins University, Steve Hanke, has mocked Ghana over its proposed plan to use gold to purchase refined petroleum products.
He described the proposed policy announced by the West African nation’s Vice President as bogus.
Prof Hanke could not understand why the country wants to embark on something that can’t address the depreciation of the Ghanaian cedi.
Ghana’s Vice President, Dr Mahamudu Bawumia, last Thursday, posted on his official Facebook page that the Government of Ghana was making plans to use gold to buy oil products to address the cedi depreciation, which caused increases in fuel prices and economic hardships in the country.
“Government is negotiating a new policy regime where our gold (rather than our US dollar reserves) will be used to buy oil products.
“The barter of sustainably mined gold for oil is one of the most important economic policy changes in Ghana since independence. If we implement it as envisioned, it will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency with its associated increases in fuel, electricity, water, transport, and food prices. This is because the exchange rate (spot or forward) will no longer directly enter the formula for the determination of fuel or utility prices since all the domestic sellers of fuel will no longer need foreign exchange to import oil products.
“The barter of gold for oil represents a major structural change,” he said.
Some civil society groups in the energy sector have expressed concerns over the issue, with some wondering about the feasibility of such a policy.
Some claimed they are yet to be engaged as stakeholders in the energy industry.
Reacting to the issue, Prof. Hanke wrote on Twitter that Ghana’s Vice President, Dr Bawumia, is grasping for straws.
“VP of Ghana Mahamudu Bawumia unveiled a plan to buy oil with gold instead of the USD. Bawumia claims that his gold-for-oil plan “will reduce the persistent depreciation of our currency.” Bawumia is grasping for straws. His plan is Bogus.”
VP of Ghana Mahamudu Bawumia unveiled a plan to buy oil with gold instead of the USD. Bawumia claims that his gold-for-oil plan will "reduce the persistent depreciation of our currency." Bawumia is grasping for straws. His plan is BOGUS. https://t.co/8x0lgU5Et1
— Steve Hanke (@steve_hanke) November 29, 2022