Ghana says in talks with Dubai to swap gold for fuel, UAE refiner denies claims | News Bharat

(Kitco News) Following news that Ghana planned to swap gold for fuel, the West African nation revealed it was in talks with the Dubai refinery to complete the swap. But the claims were quickly denied by the oil refinery.

Ghana, Africa’s largest gold producer, had a tentative agreement with Emirates National Oil Co. from Dubai to buy fuel with gold, said Kabiru Mahama, economic adviser to Ghana’s vice president, Mahamudu Bawumia.

However, this claim was denied by Emirates National Oil Co. “This is completely unfounded and incorrect,” an ENOC person told Bloomberg on Tuesday. “There have been no discussions on this issue.”

Last week, Ghana ordered major mining companies to sell 20% of their refined gold to the country’s central bank from January 1, 2023, as part of a broader government plan to trade gold for fuel.

The message was posted on Bawumia’s Facebook page. “The Bank of Ghana and the Precious Minerals Marketing Company (PMMC) will coordinate with the large scale mining companies to ensure compliance with this directive,” the Vice President said.

The price of gold will be fixed through spot prices, he added. “The gold to be purchased by the Bank of Ghana and the PMMC will be in cedis at the undiscounted spot price.”

The Bank of Ghana will buy gold from large-scale miners such as Newmont Corp., AngloGold Ashanti Ltd. and Gold Fields Ltd., the publication said. Small-scale miners have also been ordered to sell their gold to state-owned Precious Minerals Marketing Co, but the amount has not yet been specified.

Ghana accounted for 117.6 tons in 2021. And now, its government wants to use that position to create a plan to buy fuel with bullion instead of US dollars.

The idea of ​​using gold is born from the need to contain inflation, limit the devaluation of the cedi of the national currency and contribute to the constitution of dwindling foreign exchange reserves.

The new policy is scheduled for the first quarter of next year and would “fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.

The country’s inflation reached 40.2% in October. And since the beginning of the year, the cedi has fallen by more than 53%, according to Ghana’s finance minister, Kenneth Ofori-Atta. The fall makes the cedi one of the worst performing currencies in the world.

On Monday, Ghana’s central bank was forced to raise its prime lending rate by another 250 basis points to 27% to fight inflation, the highest level in 19 years.

Last year, Ghana announced its first national gold purchase program to double its official gold reserves. The country has been buying gold from miners.

“Apart from the diversification benefits of gold for our reserve portfolio, the national gold purchase program will pave the way for [the central bank] increase its foreign exchange reserves to build confidence, improve currency stability, create a more attractive environment for foreign direct investment and economic growth,” Ghana’s central bank said last year.

In 2021, the country’s foreign reserves were nearly $11 billion, with gold reserves of 8.77 tons.

To find out what Ghana’s move could mean for gold prices, click here.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a request to make any exchange of goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.

Source link