"Ghana plans to buy oil with gold instead of U.S. dollars"

Here we go. What a Thanksgiving present for the U.S. Treasury.  All right, Pundita, don't smirk. The news report is below, but first I'll get in a few words: 

Everyone has been assuming that any real challenge to the U.S. dollar would be years down the road when (if) the BRICS countries (which are adding to their roster by at least 10 countries) put together a basket of currencies, with the yuan given the biggest weight, to rival the USD and Euro. 

There are big problems with implementing such a basket, not the least of which is that the Chinese are not ready to make the yuan a reserve currency. But this plan from Ghana leaps over the technical difficulties that a basket would entail. 

So, is this the long watched-for Next Black Swan Event? If Ghana's plan works, other governments will try the same.  But that would mean the price of gold going through the roof, which could well put the poorer governments right back in the soup.  Unless they took out gold loans from governments, such as China and Russia, that have been hoarding huge amounts of gold. However, if that happens, the IMF will have cardiac arrest and the USA will launch World Wars III, IV, and V at the same time lol. Pundita that's not funny. NOT FUNNY.   

Well, we'll just have to watch and wait.  And maybe buy gold.

Ghana plans to buy oil with gold instead of U.S. dollars | Reuters - November 24, 1:58 EST

[BEGIN REPORT]

ACCRA, Nov 24 (Reuters) - Ghana's government is working on a new policy to buy oil products with gold rather than U.S. dollar reserves, Vice-President Mahamudu Bawumia said on Facebook on Thursday.

The move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.

Ghana's Gross International Reserves stood at around $6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around $9.7 billion at the end of last year, according to the government.

If implemented as planned for the first quarter of 2023, the new policy "will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency," Bawumia said.

Using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products, he explained.

"The barter of gold for oil represents a major structural change," he added.

The proposed policy is uncommon. While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite.

Ghana produces crude oil but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017.

Bawumia's announcement was posted as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenues in a bid to tackle a spiraling debt crisis.

In a 2023 budget presentation to parliament on Thursday, Ofori-Atta warned the West African nation was at high risk of debt distress and that the cedi's depreciation was seriously affecting Ghana's ability to manage its public debt.

The government is negotiating a relief package with the International Monetary Fund as the cocoa, gold and oil-producing nation faces its worst economic crisis in a generation.

Reporting by Cooper Inveen and Christian Akorlie Writing by Sofia Christensen Editing by Estelle Shirbon and Elaine Hardcastle

[END REPORT]

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