Independent Presidential Hopeful fires Bawumia over Gold for Oil Policy

An Independent Presidential Hopeful for the 2024 Elections, Rev. Dr Samuel Worlanyo Mensah has attributed the recent hikes in fuel prices to the failed Gold for Oil policy trumpeted by Vice President Dr. Mahamudu Bawumia. He has describing the policy as a waste of the country’s resources and a breeding ground for immense corruption.

In an exclusive interview with the SPYder, the renowned economist said the policy failed to address the issues of fuel hikes because it does not make economic sense to exchange gold for oil. He noted that the most efficient way for the government to deal with the issue was to sell the gold, buy an equivalent quantity of oil, and then subsidize it for the citizens.

He believed that the policy was designed to hijack the sector through middlemen and gatekeepers and this serves as fertile grounds for corruption.

“The Gold for Oil policy is not an economic policy that can drive value for money for the country. It is just a waste of time and resources.

“The ideal thing is that if you have gold, you sell it and procure the quantity of oil the country needs. The current arrangement of government will create space for middlemen and breed corruption in the value chain,” he argued.

Rev. Dr Worlanyo Mensah insists that if the policy had any positive impact on the economy, the level of depreciation of the Cedi and the hike in the prices of fuel would have been a thing of the past.

It would be recalled that, while speaking at the inauguration of the new office building for the Bulk Oil Storage and Transportation Company Limited (BOST), Dr Bawumia, said Ghana will save about $4.8 billion in foreign exchange every year as one of the benefits from the Gold-for-Oil policy. He further explained that the most important aspect of the policy was not just the reduction in fuel prices but the savings the Bank of Ghana (BoG) would make in foreign exchange (forex) as a result of lower demand. The savings were huge, and the goal was to move the importation of oil under the policy from between 50 and 60 percent to 100 percent this year.

“We will work with the bulk distribution companies (BDCs) to make this happen, but the savings in forex, when we do this, will be an annual saving of around $4.8 billion,” he said.

The Vice-President said when the country was able to execute the policy to the letter, it would mean that the oil importing companies would not be going to the BoG to look for $4.8 billion to buy oil, adding: “We will buy gold with our cedis, convert it into the oil payment and, therefore, that demand will no longer be there.”

He indicated to Ghanaians to understand that the prices of fuel would go up and come down, but what the government expected to see under the Gold-for-Oil policy was stability in the pricing, as well as savings on forex.

While expressing optimism over the prospects of the policy, Dr Bawumia said it had been either deliberately or unintentionally misunderstood by many, hence the need to shed light on it for people to understand what was being done, for which BOST was playing a very critical role.

He indicated that the major balance of payment challenge which led to the dwindling forex reserve at the central bank called for an intervention.

“Therefore, we do not need forex to go and buy the oil directly; we can use our cedis to buy the gold, use the gold to transform it either directly by barter or transform it into dollars and then pay for the oil which will be supplied and sold by the oil marketing companies (OMCs),” he explained.

“This is just a simple framework of the Gold-for-Oil policy; by so doing, we can get a hold on this rampant increases in the prices of fuel and also in the exchange rate,” he added.

He described the policy as the first of its kind in the country since independence to address that type of balance of payment crisis facing the country.

He opined that “it is the most important macroeconomic policy intervention to deal with the exchange rate depreciation and the fuel and food price inflation nexus that we have had”.

Source: News Desk