Business News of 2014-02-05

BoG outlines measures to halt cedi’s free fall

The Bank of Ghana has announced measures to help halt the free fall in the cedi's value, warning of pecuniary sanctions, jail terms, suspension and revocation of the operating licence of persons who flout the rules.

It also directed that all transactions in the country should be conducted in Ghana cedis in compliance with Bank of Ghana Notice dated October 10, 2012.

In a statement issued by the Central Bank on Tuesday, it said it has revised rules governing the operations of Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA) with effect from February 5, 2014.

The Central Bank has therefore directed authorised dealers not to sell foreign exchange for the credit of FEA or FCA of their customers.

It also stated that cash withdrawals over the counter from FEA and FCA shall only be permitted for travel purposes outside Ghana and shall not exceed US$10,000.00 or its equivalent in convertible foreign currency, per person, per travel.

No bank shall grant a foreign currency denominated loan or foreign currency linked facility to a customer who is not a foreign exchange earner, it added.

In another statement, the Central Bank required all exporters to collect and repatriate in full, the proceeds of their exports to their local banks within 60 days of shipment.

The Bank reminded the general public that failure to comply with the directives would attract penalties which include “pecuniary sanctions, jail terms, suspension and revocation of the operating licence as applicable”.

BELOW ARE THE STATEMENTS

BANK OF GHANA

NOTICE TO BANKS AND THE GENERAL PUBLIC

NOTICE NO. BG/GOV/SEC/2014/02

REVISED RULES ON THE OPERATION OF FOREIGN EXCHANGE ACCOUNTS (FEA) AND FOREIGN CURRENCY ACCOUNTS (FCA)

Further to Bank of Ghana Notices Nos. BG/GOV/SEC/2007/3 and BG/GOV/SEC/2007/4, it is announced for the information of all authorized dealer banks and the general public that with effect from February 5, 2014, the rules governing the operations of FEA and FCA have been revised.

These rules are intended to streamline the operations of these accounts and bring about clarity and transparency in their operations as well as ensure compliance with Bank of Ghana Notice No. BG/GOV/SEC/2012/12 dated October 10, 2012 on the pricing, advertising receipts and payments for goods and services in foreign currency in Ghana. The Notice states that all transactions in the country are required to be conducted in Ghana cedis, which is the sole legal tender.

MODE OF OPERATION

The Bank of Ghana has revised the mode of operation for the FEA and FCA as follows:

a. No cheques or cheque books shall be issued on the FEA and FCA.

b. Cash withdrawals over the counter from FEA and FCA shall only be permitted for travel purposes outside Ghana and shall not exceed US$10,000.00 or its equivalent in convertible foreign currency, per person, per travel.

c. Authorised dealers shall not sell foreign exchange for the credit of FEA or FCA of their customers.

d. Transfers from one foreign currency denominated account to another are not permitted.

e. All transfers outside Ghana from FEA and FCA shall be supported by relevant documentation.

Margin Account for Import Bills

f. Foreign exchange purchased for the settlement of import bills shall be credited to a margin account which shall be operated and managed by the bank on behalf of the importer for a period not exceeding 30 days.

Foreign Currency Denominated Loans

g. No bank shall grant a foreign currency denominated loan or foreign currency linked facility to a customer who is not a foreign exchange earner.

h. All undrawn foreign currency denominated facilities shall be converted into local currency with the coming into effect of this Notice. However, existing fully drawn foreign currency denominated facilities and loans to non-foreign exchange earners shall run until expiry.

Banks and the general public are hereby advised to note the above and be guided accordingly.

(Sgd.)

CAROLINE OTOO (MRS) THE SECRETARY

4th February, 2014

BANK OF GHANA

NOTICE TO BANKS AND THE GENERAL PUBLIC

NOTICE NO. BG/GOV/SEC/2014/03

REPATRIATION OF EXPORT PROCEEDS

As part of measures to streamline the collection and repatriation of export proceeds to Ghana, the Bank of Ghana:

1.reminds all authorized dealer banks and the general public, especially exporters, that the Foreign Exchange Act 2006, (Act 723) and its Operational Guidelines (Notices BG/GOV/SEC/2007/3 and BG/GOV/SEC/2007/4), require all exporters to collect and repatriate in full the proceeds of their exports to their local banks within 60 days of shipment.

2. directs that upon receipt of export proceeds, the bank shall within 5 working days convert the proceeds into Ghana cedis based on the average Interbank Foreign Exchange Rate prevailing on the day of conversion with a spread not exceeding 200 pips.

3. advises exporters with retention accounts to continue to operate these accounts in accordance with their retention agreements. Retention proceeds which are sold to the banks shall be converted into Ghana cedis based on the average Interbank Foreign Exchange Rate prevailing on the day of conversion with a spread not exceeding 200 pips.

4. advises further that offshore foreign exchange deals by resident companies, including exporters, are strictly prohibited.

All exporters should note that it is their responsibility to ensure that all export proceeds are repatriated in full.

Failure to comply with the provisions of this Notice shall attract sanctions under Sections 15(4) and 29 of the Foreign Exchange Act, 2006 (Act 723). The penalties include pecuniary sanctions, jail terms, suspension and revocation of the operating licence as applicable.

Banks and the general public are hereby advised to note the above and be guided accordingly.

(Sgd.)

CAROLINE OTOO (MRS) THE SECRETARY

4th February, 2014