Bank of Ghana review foreign exchange measures

The Bank of Ghana (BoG) on Friday announced reviewed measures to ease foreign exchange controls and also ensure clarity, transparency and streamline operations in the foreign exchange market.

The review follows challenges being encountered by local banks due to earlier measures introduced by the BoG in February this year to check the fall in the local currency.

The review, without prejudice to the limit of $10,000 withdrawal per travel, and the $10,000 annual transfer without documentation, allows over-the-counter cash withdrawals from FCA and FEA up to $1,000 or its equivalent per transaction in foreign currency.

In effect the directive, now permit foreign currency account holders to withdraw up to US$10,000 without prior proof of travel documentation. The threshold for transfers abroad without initially submitting documentation has also been increased from US$ 25,000 to US$50,000, and where documentation in respect of a transfer remains outstanding, any subsequent import transaction by the importer, irrespective of the value, can only be made on prior provision of documentation required for the current transaction.

Dr Benjamin Amoah, Head of Financial Stability at the Bank of Ghana at a press conference announced these measures saying they came after a thorough review of the controls the Central Bank introduced in February this year to halt the depreciation of the cedi.

According to him the earlier measures limited access to foreign exchange and restricted local trade transactions to the cedi. He said under the current regulations, foreign exchange and foreign currency account holders are allowed a maximum withdrawal of the equivalent of US$10,000 for travel abroad, which was even subject to the provision of documentation for transfers outside Ghana.

The earlier directives resulted in some challenges both to the banks and restricted customers, therefore with the review foreign currency account holders will no longer need to show proof of travel in order to withdraw from their foreign account, but could do that afterwards.

Dr Amoah said the review also permits exporters of goods, and businesses, such as hotels and educational institutions, which provide services, to quote their prices in Ghana Cedis, but could receive payment in foreign currency from non-residents.

He said the 60-day mandatory repatriation of export proceeds has also been reversed and aligned to the terms agreed between trading parties, meaning, where sales contract stipulates that the exporter would be paid within seven days, the funds should be repatriated within the same period.

Again the 5-day mandatory conversion of export receipts into Ghana cedis is also reversed, allowing exporters to now retain up to 60 per cent of their export receipts in their FEAs, and the remaining 40 per cent converted at market rates within 15 working days.

He said to assist importers to purchase goods from multiple sources abroad, the BoG in collaboration with all banks will encourage the use of non-cash instruments, such as plastic cards by traders, increase the limits on cards beyond US$10,000 but not exceeding US$ 50,000, to meet their legitimate needs, but this should be supported on return by relevant documentation.

He also said the Bank encourages the use of currencies of Ghana’s major trading partners, such as the Chinese Yuan, which was already available, instead of the US dollar as the sole settlement currency and this was to take away the overdependence on the US dollar.

He said special case for the energy sector, mining and other support services would also be considered on case-by-case basis as was done before. He said the Bank would soon issue an official notice reflecting these revisions and any existing measure that was not mentioned in the forthcoming notice shall remain in force and would monitor the implementation of the measure and take further actions if necessary.