BoG: Gold-for-oil policy leads to almost 50% reduction in fuel prices

The Bank of Ghana (BoG) has attributed the recent decline in fuel prices in the country to the government’s gold-for-oil policy.

According to Stephen Opata, the Director of Financial Marketing at the BoG, the policy has played a significant role in the almost 50% reduction in ex-pump prices. In addition to the fall in international prices of fuel, the gold-for-oil policy has helped the country contract fuel at competitive prices, resulting in cheaper prices at the pump for consumers.

The gold-for-oil policy, which was introduced by the government in 2018, aims to use the country’s gold reserves to secure oil supplies from partner countries. The policy allows the country to trade its gold reserves directly for oil, which helps to reduce the cost of fuel imports. Ghana, which is a net importer of petroleum products, has been grappling with high fuel prices, which have contributed to inflation and increased the cost of living for consumers.

The government’s gold-for-oil policy has been lauded as a step in the right direction towards reducing the country’s reliance on foreign currency to pay for fuel imports. The policy has also helped to stabilize the country’s currency, the cedi, by reducing the demand for foreign currency.

Mr. Opata’s remarks come ahead of an anticipated reduction in fuel prices between 2% and 9% on April 1, 2023. This will be the second consecutive reduction in fuel prices, following a reduction of 3% to 10% in the second pricing window of March 2023. The new prices will see petrol, diesel, and LPG sold for a little over GHS 12 and GHS 13 per liter and GHS 15 per kilogramme.

The reduction in fuel prices is expected to have a positive impact on the country’s economy, as it will help to reduce inflation and ease the burden on consumers. It is also expected to boost economic activity by reducing the cost of transportation and fuel-related inputs for businesses.

The government’s gold-for-oil policy is a significant step towards achieving energy security and reducing the country’s reliance on foreign currency to pay for fuel imports. The reduction in fuel prices is a welcome development that will benefit consumers and businesses alike, and the government’s commitment to ensuring affordable and accessible fuel for all is commendable.