Cabinet Endorses BoG’s Anti-Dollarisation Measures

mahama ayariga 1_3CABINET has endorsed measures taken by the Central Bank to end the dollarization of the economy and ultimately restore the stability of the Cedi.

It has, accordingly, directed state agencies to fully support efforts by the Bank of Ghana (BOG) in the implementation of the measures.

The cabinet gave its approval yesterday, following an emergency meeting with the Governor of the BOG at the Flagstaff House in Kanda, aimed at clarifying a number of concerns arising from the Bank’s recent announcement of measures to address the depreciation of the cedi.

The meeting took note of recent developments in the global economy, especially exchange rate adjustments in emerging and frontier economies.

It was observed that some emerging economies had fared far worse than Ghana.

A statement signed by the Minister of Information, MahamaAyariga, and made available to the Ghanaian Times shortly after the crunch meeting, however, expressed concern about the lack of clarity in some of the directives announced by the BOG.

This included those aspects that affect the operations of foreign currency accounts and their impact on the operations of exporters and businesses in general.

Consequently, the statement indicated that the BOG agreed to address any ambiguities in the measures announced and provide more clarity.

“Cabinet remains committed to the implementation of a number of policies that would reduce import dependency, promote consumption of local produce, thereby addressing the current imbalance,” the statement said.

The Central Bank last Wednesday directed, among other measures that all transactions in the country should be conducted in Cedis in compliance with its notice dated October 10, 2012 and warned of stiff punitive measures against offenders.

The directives generated some uneasiness across the business community, with some operators questioning its relevance, and with others doubting its effective enforcement.

Other measures by the bank to shore up the cedi against the major foreign currencies included the banning of commercial banks and other financial houses from issuing cheques and cheque books on foreign exchange accounts (FEAs) and foreign currency accounts (FCAs).

In addition, over- the- counter cash withdrawals from FEAs and FCAs not exceeding $10,000 should only be permitted for travel purposes outside Ghana or its equivalent in convertible currency per person per travel.

The local currency has depreciated by 5.1 per cent against the dollar this year while other emerging economies like Turkey, Argentina, India and South Africahas also seen their currencies plummet against the dollar.

Emerging market currencies have been under pressure since the US Federal Reserve commenced the implementation of its policy of “tapering,” which refers to the bailout or stimulus packages implemented at the height of the world financial crisis.

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