Flagbearer of the New Patriotic Party, Dr Mahamudu Bawumia, has revealed that he feared Ghana could suffer a Sri Lanka-style economic crisis as the country struggled with severe foreign exchange shortages.

He said his concerns grew as Ghana battled a balance of payments crisis following the Russia-Ukraine war, which shut the country out of international capital markets and constrained access to foreign exchange.

Speaking at a public event in a video posted on his Facebook page, Dr Bawumia said he was particularly concerned by developments in Sri Lanka, where shortages of essential goods triggered widespread public protests during the country’s economic crisis.

“In fact, at some point I was very concerned because I could see at the same time what was happening in Sri Lanka,” he said.

“In Sri Lanka, people were out on the streets; they were facing shortages of food because they didn't have the foreign exchange to pay for food.”

He said Ghana faced a similar risk because the country did not have enough foreign exchange to meet its economic needs.

According to Dr Bawumia, the situation was compounded by restrictions on the Bank of Ghana’s ability to intervene in the foreign exchange market.

He said the central bank was limited to interventions of about $80 million per month, despite monthly demand for foreign exchange being significantly higher.

“The demand for foreign exchange for Ghana on a monthly basis was significantly more than $80 million a month,” he said.

“When demand exceeds supply, prices go up. So in that situation, the exchange rate depreciated almost on a daily basis.”

The resulting pressure on the cedi, he said, raised concerns about Ghana’s ability to finance imports and maintain economic stability.

Dr Bawumia said it was against this backdrop that the previous government introduced the Gold-for-Oil programme alongside the Gold-for-Reserves initiative.

“The background for the gold-for-oil programme is this. It essentially saved us from a bigger crisis,” he said.

He explained that selling Ghana’s gold for dollars would not have fully resolved the immediate problem because the central bank was constrained in the amount of foreign exchange it could use to intervene in the market.

The Gold-for-Oil arrangement, he said, therefore provided a way to exchange Ghana’s gold directly for petroleum products while reducing pressure on the country’s limited foreign exchange resources.

“The purpose of the programme was to stabilise the currency and build reserves,” he said.

Dr Bawumia added that Ghana’s foreign exchange position had improved significantly by the end of 2024 after the country began building reserves through gold transactions.

“Once we started building the foreign exchange through the gold trades properly, by the end of 2024, Ghana had huge foreign exchange reserves compared to when we started,” he said.