BoG to probe companies still pricing in dollars – Governor reveals

Dr Ernest Addison, Governor of the Bank of Ghana, has warned the general public and businesses especially to desist from pricing in dollars, saying, the central bank will start investigating complaints against some businesses engaged in the practice thereby flouting the BoG’s rule.

The BoG has banned pricing in dollars in Ghana as a measure of strengthening the cedi.

Dr Addison reminded the general public at the Public Accounts Committee (PAC) hearing on Wednesday, June 23 that it is illegal for businesses to price in dollars.

Answering a questions posed by Member of Parliament for Ningo Pramparma, Samuel Nartey George regarding the measures the central bank has taken to tackle persons trading in dollars in Ghana, an action that goes against the BG’s regulation, Dr Addison said : “As you are aware the central bank has come out very clearly on trying to declare dollarization illegal and we have gone round trying to stop people from pricing and invoicing in US dollars .

“ But what you described is the situation in which the school is indexing its charges to the exchange rate . They can decide to index their charges to the consumer price index , that is another way of measuring what the change in cost of living is.

“And we found out that people are more interested indexing to the dollar rather than indexing to the CPI.

“ I think that if you look at the stability that we are seeing in the exchange rate , may be they better be indexing on the CPI , which if you look at where the inflation rate is today at 10.6%, that is much higher than indexation to the dollar.

“That I think it reduces the incentives for dollarization. When you have a stabled currency that is not depreciating very fast , you don’t have widespread dollarization because the incentive is not there.”

He added : “We already said that we do not encourage invoicing in foreign currency . We have already said that we do not support dollarization , But pricing generally in the economy is on the basis of an assessment of conditions, and typically the consumer pricing index which is the rate of inflation is what would normally be used as the benchmark .

“Even for wage adjustments when the labour goes to negotiate with their employers they look at the change in the cost of living and use the inflation rate as an adjustment factor . So all that I am saying is that , now that we have a relatively stable currency the incentive to index in the US dollar is not there , but yes it is illegal to be pricing in dollars. It is illegal to invoice in USD , it is illegal to index in USD.”

When his attention was drawn by the lawmaker about some companies still engaged in the practice he said : “We will investigate it”