Business News of 2014-02-10

Gov't agencies directed to halt quoting charges in foreign currencies

Government agencies, departments and institutions have been directed to stop quoting their services in foreign currency.
This is one of measures the Bank of Ghana together with the Finance Ministry is instituting to help stabilize the Ghana cedi.
The new directives by the Central Bank have been heavily criticised with the accusation that government itself does not appear to have confidence in the cedi, as some state institutions price in dollars.
JOYBUSINESS has gathered that institutions like the Ghana Ports and Harbours Authority, The police CID and Customs Division of Ghana Revenue Authority price some of their services in dollars.
But answering questions at the Monetary Policy Committee meeting (MPC), Dr. Wampah said this practice would soon be over.
He added that the directive also bars these agencies from contracting loans in foreign currencies.
“Indeed I have had discussions with the Minister of Finance on these foreign currency loans. Sometimes you’ll hear a government agency contracting foreign currency loan with a bank. He has already instructed MMDAs to desist from that. Not just the private sector but government agencies as well”
Addressing the menace of black marketeering, the Governor explained the Central Bank would have to collaborate with the security agencies to clamp down on operatives.
“I believe we have a transparent way of dealing with the issues as we’re trying to do. We’ll gradually get a lot of those transactions into the official channels, what will remain there will be small transactions” he assured.
Some analysts say, though these measures are good, it would have been better to adopt the gradual approach to ensure that they really work , rather than introducing all the measures at once. But Dr. Wampah does not share in this idea.
For many market watchers like the Head of Research for Africa for Standard Chartered Bank, Razia Khan there is no short cut in tackling the root cause of the depreciation, which is linked to government spending and rising wage bill
"Restricting, access to foreign exchange is not going to be great for confidence", she said.
In another development, foreign account holders who thronged their banks today to make withdrawals were left disappointed as they were forced to accept cedis instead of dollars.
Foreign Account holders can no longer make withdrawals in any other currency except for the cedi.
Some foreign account holders who spoke to JOY BUSINESS said they may be forced to close down their accounts.
Meanwhile The Bank of Ghana has released additional 20 million dollars onto the market to aid the operations of commercial banks and oil imports.
JOYBUSINESS has gathered that the money was released on Tuesday and Wednesday. This brings the total amount advanced to 60 million dollars. However some commercial banks maintain, the economy needs about 250 million dollars to really stabilize the situation.
Source: myjoyonline
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