Business News of Monday, 16 June 2014
A financial analyst, Sydney Casely-Hayford has stated that the Bank of Ghana’s (BoG) review of the Forex rules it introduced earlier this year is an admission that they [BoG] made a mistake.
“In so many words, they are saying they made some mistakes,” he said.
The central bank has responded to public outcry and the recommendations made in the Senchi Consensus by relaxing some of the Forex rules it implemented in February 2014.
The measures were aimed at halting the further decline of the cedi and curbing the increasing dollarization of the Ghanaian economy.
Banks were banned from issuing cheques and cheque books on Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA).
They were also prevented from granting a foreign currency-denominated loans or foreign currency-linked facility to a customer who is not a foreign exchange earner.
Offshore foreign deals by resident companies, including exporters in the country were banned as well, while over-the-counter cash withdrawals from foreign exchange and foreign currency accounts not exceeding US$10,000 was only to be allowed for travel purposes outside Ghana or its equivalent in convertible currency per person per travel.
The quotation and transaction of goods and services in foreign currency was also prohibited.
Nonetheless, on Friday, the central bank announced a review to these rules, but the importers and exporters association is insisting the revised rules will still affect their businesses negatively.
On Citi FM’s The Big Issue, Casely-Hayford remarked that the central bank had about four months to access the impact of their measures and “they say that the cedi depreciation has slowed down by 2.7%. However, if it continues deteriorating at 2.4% for the rest of the year, that will be another eight months of 2.7% of depreciation; so they clearly have seen that it can’t work.”
According to him, the BoG has made some significant amends by relaxing some of their rules.
Some of the revised rules by the BoG are that importers can now use their credit cards both locally and abroad to make payments.
Withdrawals up to US$10,000 without proof of travel are now being allowed.
There have been a reversal of the 60-day mandatory reparation of export proceeds.
The 5-day mandatory conversion of export receipts in Ghana cedis has also been reversed
The financial analyst mentioned that from henceforth, “we will see how trade will improve, and we will see how the cedi will be restored.”
He advised the managers of the economy to ensure that pertinent decisions they take “will last a long time and you are going to be in the position to live up to the expectations that you have promised.
Casely-Hayford said he is convinced the reviewed measures “will get us somewhere a little better.”