The Bank of Ghana (BoG) has issued a directive aimed at stabilizing the foreign exchange market and ensuring the efficient allocation of foreign currency resources. This directive mandates that banks cease disbursing foreign currency (FCY) cash to large corporations unless these transactions are fully backed by equivalent FCY cash deposits made by the same corporation. The BoG emphasizes the importance of proper documentation to verify the source of funds for each payout. This measure is intended to address a growing concern identified by the Bank: the increasing practice of large corporations withdrawing FCY cash without corresponding prior FCY cash deposits. The BoG asserts that this practice places undue strain on the foreign exchange market, counteracting efforts to maintain stability.
The directive specifically targets large corporations, including, but not limited to, Bulk Oil Distribution Companies, mining companies, and other comparable entities. The BoG recognizes the crucial role these large corporations play in Ghana’s economy, particularly in vital sectors such as petroleum supply and mineral exports. The Bank affirms its commitment to supporting their operations and acknowledges their importance in maintaining essential supply chains. However, it underscores the necessity of regulating FCY cash withdrawals to ensure the prudent management of foreign exchange reserves.
To mitigate the potential impact of this directive on legitimate business operations, the BoG, in collaboration with the government, has implemented mechanisms to procure and supply foreign exchange liquidity specifically designed to meet the genuine import needs of these large corporations. These measures represent a proactive approach to balance the support for essential industries with the imperative of maintaining a stable foreign exchange market. By connecting FCY cash withdrawals to corresponding deposits, the BoG aims to prevent speculative withdrawals and ensure that available foreign exchange resources are channeled towards supporting legitimate import activities.
The BoG stresses the importance of transparency and accountability in foreign exchange transactions. The requirement for supporting documentation underscores the commitment to ensuring that FCY cash withdrawals are directly linked to genuine import requirements. The BoG’s directive reinforces its commitment to preventing the misuse of foreign exchange reserves and maintaining the stability of the Ghanaian Cedi. By implementing these measures, the BoG aims to curb excessive demand for foreign currency that is not directly tied to legitimate business operations.
The directive emphasizes the mandatory nature of compliance and warns of regulatory sanctions for non-adherence. This highlights the seriousness with which the BoG views this issue and its determination to enforce the new regulations. The BoG calls upon all banks to adhere strictly to the directive and cooperate fully with the Bank in implementing the new procedures. The Bank emphasizes the shared responsibility of all stakeholders in ensuring the efficient and transparent utilization of foreign exchange resources.
Furthermore, the BoG has requested the cooperation of relevant industry associations in disseminating information about this new directive to their members. This collaborative approach aims to achieve widespread awareness and compliance within the affected sectors. The BoG urges these associations to actively promote adherence to the directive among their members, stressing the collective responsibility of all stakeholders in maintaining a stable and transparent foreign exchange market. This collaborative effort aims to create a level playing field and prevent the misuse of foreign exchange resources.
