Ghana’s vice-president has simply proposed that his nation pay for its gas purchases in gold bars. The nationwide foreign money is experiencing a worrying depreciation.
Nana Akufo-Addo not appears to know which financial saint to show to. Like others, his nation is caught up in an inflationary spiral – 40% annual inflation in Ghana, in line with Bloomberg. Extra particularly, his regime is continually being dragged again to its damaged promise to repair public funds with out worldwide assist. The nation’s over-indebtedness has led to an unstoppable decline within the worth of its foreign money on the cash market, which is disrupting worldwide commerce. The cedi misplaced about 50% of its worth in 2022…
What do you do when a foreign money collapses to the purpose the place a few of its residents flip away from it – one neighborhood within the Higher West Area has already adopted the CFA franc – Devalue it? On the danger of inflicting social shockwaves? Change it, a time-consuming phantasm within the midst of a disaster? Activate the printing press, which might have a deleterious impact in instances of inflation?
Undertake a international foreign money – as Zimbabwe did – or a crypto-currency – because the Central African Republic tried to do? Skip out on the present financial components and return to the gold customary of an period regarded as lengthy gone? Ghana is choosing the trail on the ridge, someplace between bartering and what economists name a “metallic financial system”…
The vice-president has simply introduced that his nation is contemplating paying for its gas purchases in gold bars, in an effort to freeze the depreciation of the cedi, whereas preserving Ghana’s international trade reserves.
The latter are continuously lowering, estimated at $6.6bn right this moment, in opposition to $9.7bn final 12 months. This phenomenon might be defined by the evolution of the hydrocarbon sector, specifically the closure of the Tema refinery in 2017. Ghana has been a crude oil producer for greater than a decade, but has to import all of the refined petroleum merchandise it wants…
Though the primary quarter of 2023 is already looming, Mahamudu Bawumia has but to element the modalities for implementing the cost of gas purchases in gold bars. However mining firms working in Ghana have already been ordered to promote 20% of their gold inventory to the central financial institution, ranging from 1 January subsequent 12 months. Will they be paid in cedi?
The Ghanaian cedi is at present ranked among the many worst performing currencies on the earth, together with the Sri Lankan rupee. And Ghanaians have just lately taken to the streets to protest in opposition to the excessive price of residing and hovering gas costs. The financial disaster is more and more taking up the looks of a political one…
