Ghana’s vice president, Mahamudu Bawumia, revealed this week that the government wants to pay for oil imports with gold instead of US dollars. He explained the plan as an attempt to protect the country’s dwindling foreign currency reserves.

Official data shows Ghana’s gross international reserves have fallen from $9.7 billion at the end of 2021 to around $6.6 billion at the end of September 2022.

The reserves could reportedly cover just three months of the country’s goods and services imports — half a month short of the government’s target for 2022.

The gold-for-oil policy is expected to be implemented in the first quarter of 2023, to counter inflation caused by the depreciation of the national currency. Bawumia explained that the Ghanaian cedi has lost more than half of its value against the dollar so far this year due to strong demand for the greenback from oil importers.

An oil-producing country, Ghana still has to import products such as gas and diesel, because its only oil refinery has been offline since an explosion in 2017.

The African nation is “in high risk of debt distress” as the cedi’s depreciation was “seriously affecting” its ability to manage its public debt, the Finance Ministry says. Ghana is currently negotiating a relief package with the International Monetary Fund.

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