Business News of 2014-02-20

Cedi will stabilise next month - BoG

The Bank of Ghana (BoG) says it expects cedi to start stabilising strongly against the United States dollar from next month.

The Ghana cedi has depreciated by almost 8 percent against the dollar from January this year.

The central bank is basing its prediction of stable cedi on recent measures it introduced to mitigate the depreciating local currency.

Although anaysts such as former Trade Minister, Alan Kyeremateng, has described the recent measures by the Bank of Ghana as counter-productive, Head of Financial Stability, Dr. Benjamin Amoah, told Joy Business, the measures are appropriate since free fall in the cedi's value as experienced over the past months is already reducing.

Dr Amoah is confident stronger indications of an appreciating cedi will also be experienced by third quarter of this year. He based this projection on cocoa revenue which is expected within that period.

He however concedes that the measures will not singularly stop the cedi's freefall in the long term.

"We need to make some structural changes in the way we operate our economy. We need to gradually move from dependence on exports to some import substitution. That means we need to encourage manufacturing and industrialisation", said Dr Benjamin Amoah.

He said even though these complementary measures may take some time before its impact is felt, "a journey of a thousand miles is begun with a step".

The BoG projection should bring some respite to most businesses that have seen their budgets throw out of gear because of the volatilities the cedi has been going through over the past weeks.

Meanwhile, the Bank of Ghana has maintained that it has not made any changes to recent measures it announced to stabilise the Ghana cedi as reported by the media.

There were reports in the media that the central bank has revised recent directives it introduced in reaction to public concerns..

But Dr, Benjamin Amoah explains that the release which was wrongly interpreted by some media houses only sought to clarify some key points in the directives.

The central bank also told Joy Business it is not true that stakeholders were not consulted before introduction of the foreign exchange measures. The Bank of Ghana insists there was a significant engagement of all the main players before its introduction.

Some analyst had maintained that challenges being faced by local business in the wake of the foreign exchange measures shows that the regulator did not engage the banks especially at the initial stages.

Among the measures introduced by the central bank included restrictions on cash withdrawals over the counter from Foreign Exchange Accounts and Foreign Currency Accounts which it directed 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.

The central bank has also directed all exporters to collect and repatriate in full, proceeds of their exports to their local banks within 60 days of shipment.