Bank of Ghana (BoG) is under pressure from embassies in Ghana and some multinational companies to allow them to pay their expatriate staff in foreign currencies, despite the bank’s directives which frown upon the use of foreign currencies in the country.
An Economist and Accountant at the Financial Stability Department of the BoG, Dr. Settor Amediku, who disclosed this, stated: “I have received a lot of calls from the embassies who called us and want dispensation to be paid in foreign currencies and we said no”.
He continued:” I think the Embassy of Israel is trying and we said no. You can’t be paid in foreign currencies. But we are saying that if you have dependants outside and you receive your salary, let’s say $20, you can ask your bank to wire part of your salary to your dependants outside”.
Dr. Amediku insisted that; “expatriate staff are not going to be paid in dollars or any foreign currency” in the country. Although the bank had previously clarified the directives, which it issued in the wake of a persistent depreciation of the local currency, these embassies and multinational firms want to go contrary to the directives.
The directives, among other things, made it impossible for people to withdraw foreign currencies at the various banks in the country. They also denounced the use of forex in the payment of goods and services, as well as quotation of business contracts in currencies other than the national currency, the cedi.
Dr. Amediku, who spoke angrily about the intentions of these embassies and multination firms, maintained that “Expatriate staff should be paid in cedis, but if you want to transfer some to your dependant outside, you just go to the bank and say that I have my wife in Israel, so transfer $5 out of my salary to her. So no payroll is required.
“We even told the banks that any bank that pays any of their clients in foreign currency will be punished. The central bank is very serious about this”.
He explained to some selected journalists at a day’s seminar on the analysis of financial statements organized by the Institute of Financial and Economic Journalists (IFEJ), in collaboration with the Ghana Bankers Association (GBA) that the recent BoG directives were not new.
“They have been there, only that we want to ensure that the right thing is done to help all of us in the economy”, the economist stated.
For importers, Dr. Amediku said “You can set up a margin account in agreement with your bank. So that they transfer part of that dollars into that account, and when you need external transactions they will do it, but if you want to spend it in this economy you use cedis, which is the legal tender of Ghana.
“That is also driving the black market, because I have worked in Banking Supervision for a number of years, I know that some forex bureaux serve as a conduit for importers, so they established those foreign bureaux as a way of mobilising dollars for their imports”, he added.
Dr. Amediku emphasised that “instead of the money staying in the banking system so that, for example, if a company wants to import plant, they can get access to it to do their import, but rather it is given to individuals who may not actually use it productively to help the economy.”
Touching on foreign account cheque holders, he noted that foreign account cheque books are phasing out, saying “Gone are the days when you see people signing foreign current exchange cheques. Now you can’t do so. It is a mere paper now, just destroy it. So those who are holding them should throw them out”.
When asked why one has to write to the bank if the person wants to withdraw from his or her dollar account, Amediku explains that “the central bank is not aware of this. We always say in the central bank that we can’t micromanage, meaning we can’t tell the banks the basic principles and procedures they have to follow when they want to transact their business. This could be because they want to keep evidence that you are actually coming for the money, so that when we come for inspection, they will have evidence to show us.
The cedi came under heavy pressure from the beginning of this year, causing the business community, including members of the Association of Ghana Industries (AGI) to ask for practical solutions that would help stabilize it.
This forced the BoG, which is in-charge of the management of the monetary policy, to respond with some directives, which among other things made it impossible for individuals, traders, to withdraw their forex from the banks.
The directives also made it impossible for travelers to carry foreign currency in excess of US$10,000, a rule the business community, especially those into imports, say is counterproductive.