Business News of 2014-06-14

BoG scraps some of its forex rules

The Bank of Ghana (BoG) has ditched some of the rules it introduced in February this year to save the cedi from further fall against the major foreign currencies especially the dollar.

One of the rules introduced in February was that customers were not allowed to make withdrawals of more than US$10,000 without proof of travel over the counter.

However per the revision customers can make large transactions over the counter provided they prompt their banks a couple of days before the withdrawal.

However, they can only withdraw up to 1,000 Ghana cedis over the counter without prompting their banks.

According to the Head of Financial Stability at the bank of Ghana, Dr Benjamin Amoah, who addressed the press on the revisions ‘This is a cedi denominated economy if you want cedis your bank can get it, but if it is in foreign currency you need to prompt your bank. It’s a large transaction you need to prompt your bank. But for now only 1,000 dollars is permitted.’ He said

Under the previous rules banks were not allowed to dish out foreign exchange loans however the Bank of Ghana has ditched that law and will now allow banks to give loans in foreign currency.

According to that Bank of Ghana, to minimize disruption of contracts already entered into by banks and their clients all undrawn balances of foreign currency facilities can now be withdrawn in the original currency in which the facility was taken.

Also, the threshold for transfer abroad without initially submitting documentation has been increased from 25,000 dollars to 50,000 dollars per the revision.

However the documentation on that transaction must be provided within 90 days.

The bank of Ghana will now also allow businesses that provide services for non-resident Ghanaians to use dollars.

Exporters of goods and services can now also receive payment in foreign currency from non residents. This means hotels, educational institutions among others may receive payments from non residents in foreign currency.

The prohibition of offshore currency transactions by resident Ghanaian companies as well as restrictions that require exporters to collect and repatriate in full the proceeds of their exports to their local banks within 60 days of shipment have also been relaxed.

The 60 day mandatory reparation of export proceeds has been reversed and aligned to the terms agreed between trading partners.

The 5 day mandatory conversion of export receipts in Ghana cedis has also been reversed.

Exporters can now retain up to 60 percent of their export receipts in their foreign exchange accounts and the remaining 40 percent converted at market rates within 15 working days.

Meanwhile, the BoG says developments in the Ghana –dollar exchange rates according to an analysis of its data show that the pace of depreciation has slowed. Monthly depreciation declined steadily from a peak of 7.8 percent in January to 2.7 percent in May this year. The central bank also says the analysis further shows that certain aspects of the measures were constraining businesses of exporters and importers.