Dr Ben Amoah, Head of Financial Stability at the Bank of Ghana (BoG), has attributed the depreciation of the cedi to making and receiving payments in foreign currencies in Ghana.
He said such practice must cease in order to help curb the unnecessary and excessive demand for foreign currencies.
Speaking at the recent business forum organized by the Ghanaian-German Economic Association in Accra on the theme: ‘Understanding the BoG Directives on Forex and Impact of the Value-Added Tax on Banking Services,’ Dr Amoah called on members of the public to adhere to the Central Bank’s directives on foreign exchange and foreign currency accounts.
He indicated that offshore foreign exchange deals by resident and non-resident companies, including exporters and non-resident banks, were strictly prohibited, while export proceeds were to be repatriated to local banks within 60 days of shipment.
According to him, the current measures will help promote the use of the cedi as the sole legal currency in the country.
He added that banks must open margin accounts for forex to be lodged into it to meet their needs.
‘To deliver a sustainable stability in the forex, the market will require the restructuring of the economy towards changing the economy from its current over-reliance on imports by embarking on massive industrialization and also revamping the manufacturing sector to be able to produce a significant proportion of our imports, particularly consumables,’ he emphasized.
He said fostering the stability in the local currency will require strict adherence to budgetary targets to minimize budget deficits, improving revenue mobilization by widening the tax base, diversification of exports and intensive efforts to block foreign exchange leakages.
Additionally, he noted that there was the need for greater coordination and synchronization of fiscal and monetary policies, explaining that high fiscal and current account deficits were usually associated with significant exchange rate depreciation.
‘As we work towards changing the structure of the economy, there is also the need to bring our fiscal and current account deficits to sustainable levels to ensure sustainable stability of the Cedi.’
Kennedy Okosun, Chairman of Krif Ghana Limited, said agreements and Memoranda of Understanding (MoU) will need to be fine-tuned.
By Samuel Boadi
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