A principal investigator from the Institute of Statistical Social and Economic Research (ISSER), has shed light on the risks associated with the Gold for Oil initiative, emphasising the critical issue of clarity regarding gold refinement before sale.
Dr Fred Dzanku made this revelation at the “Curbing IFFs to Finance Development” workshop held at AH Hotel in East Legon, Accra, on Thursday, 16th November 2023.
The study, aimed at assessing the Gold for Oil initiative’s economic justification, legal and regulatory gaps, and embedded Illicit Financial Flow (IFF) risks, employed a multidisciplinary research approach.
Dr. Dzanku delved into economic analysis, examining the long-run relationships between the exchange rate and oil imports.
The legal analysis focused on the governance architecture and stakeholder views of the G40 policy, while the political economy analysis scrutinised the legal basis of the initiative.
Preliminary findings from the study revealed a positive long-run relationship between the Ghanaian cedi’s depreciation and oil imports, albeit with a modest effect size.
More significantly, the absence of parliamentary scrutiny raised questions about the legal basis for the transactions.
Additionally, the lack of pricing regulation for the policy was identified as a potential loophole.
One critical revelation highlighted during the presentation was the lack of clarity on whether gold would be refined before sale.
This ambiguity, as emphasised by Dr Dzanku, creates an avenue for mispricing and undervaluation of gold within the Gold for Oil initiative.
The uncertainty surrounding the refining process opens the door for potential manipulation in the valuation of gold, posing serious risks to the initiative’s economic integrity.
Source: Raymond Acquah