The purchases are to accrue from a new arrangement that allows the central bank to pay cedis for foreign exchange (forex) that have been repatriated by the exporters.<\/p>\n
Already, the bank purchased US$20 million from one mining firm last week in a positive start to the new programme that seeks to bolster BoG\u2019s reserves in the midst of rising demand and a depreciating cedi that is attributable to weak buffers.<\/p>\n The Director of the Research Department of the bank, Dr Philip Abradu-Otoo, told the Graphic Business on August 27 that BoG also received commitments worth more than US$120 million from other mining companies in the programme\u2019s first week.<\/p>\n He said the purchase and the pledges brightened the bank\u2019s optimism that the programme would successfully bolster the central bank\u2019s reserve position.<\/p>\n Basis<\/strong><\/p>\n The central bank needs a swell of hard currencies to fund imports and meet foreign debt repayment and amortisation obligations after limited inflows stretched the reserves to a record low, further exposing the cedi to one of its worst year-to-date depreciations since 2015.<\/p>\n Net reserves fell by more than half to US$3.58 billion in June this year from US$7.94 billion the same period last year.<\/p>\n It followed a dry-up in flows from the traditional Eurobonds although demand continued to soar.<\/p>\n To help shore up the reserves and contain the cedi depreciation, BoG announced on August 17 after its emergency Monetary Policy Committee (MPC) meeting that it would purchase all forex arising from the voluntary repatriation of export proceeds from mining and oil and gas companies.<\/p>\n \u201cThis will strengthen the central bank\u2019s forex auctions,\u201d the bank said.<\/p>\n BoG data show that gold exports fetch an average of US$3.5 billion annually, of which the companies voluntarily repatriate about 75 per cent.<\/p>\n Data from the Ghana Chamber of Mines (GCM), however, show that mineral exports bring in an average of US$5 billion per annum, of which gold is the lead earner.<\/p>\n Call to action<\/strong><\/p>\n The Chief Executive Officer (CEO) of the chamber, Sulemanu Koney, said a policy guide from BoG showed that the central bank wanted to buy a portion of the voluntarily repatriated earning.<\/p>\n Dr Koney told the Graphic Business on August 25 that members saw the programme to be a national call to action and were ready to help make it a success.<\/p>\n \u201cIn difficult situations like this, responsible institutions rise up and help their nations.<\/p>\n \u201cIn the spirit of this, we asked our members to see how they could help,\u201d the CEO of the advocacy body for the large-scale mining firms said.<\/p>\n \u201cThe response from our members has been positive. One company has actually sold US$20 million to the central bank and another big firm has said that its parent company has given the go-ahead for all their earnings for this year to be sold to the central bank,\u201d he added.<\/p>\n Arm\u2019s length<\/strong><\/p>\n Dr Koney, however, said miners would participate in the transaction at arm\u2019s length and conscious of the need to prudently balance their forex and cedi floats against real demand.<\/p>\n The oil-producing companies were not readily available for comment.<\/p>\n Change in tactics<\/strong><\/p>\n Until the latest policy, exporters, including the extractive companies, were allowed to sell their inflows to the banks for the lenders to report to the central bank.<\/p>\n It is understood that that arrangement was supported by the International Monetary Fund (IMF) to help encourage transparency and price discovery in the exchange market.<\/p>\n Dr Koney of the Chamber of Mines said the current arrangement allowed miners to sell to either the central bank or the commercial banks.<\/p>\n He, however, explained that peculiarity of BoG\u2019s need for forex meant that his outfit would prioritise demands of the regulator over the lenders.<\/p>\n He dismissed suggestions that the central bank was offering higher rates, noting that the mining companies \u201care not in this to profit\u201d.<\/p>\n \u201cForex trading is not our core business and none of us sees this as an avenue to make money; we see it as an opportunity to support and stabilise the situation,\u201d Mr Koney said.<\/p>\n He confirmed that BoG had agreed to use the Bloomberg rate in settling the demands, adding that that rate was lower than the rates that commercial banks often offered.<\/p>\n![\"\"](\"https:\/\/i0.wp.com\/www.gbcghanaonline.com\/wp-content\/uploads\/2022\/08\/BOG-1.jpg?resize=696%2C513&ssl=1\")
![\"BoG](\"https:\/\/i0.wp.com\/www.gbcghanaonline.com\/wp-content\/uploads\/2022\/08\/Sulemanu-Koney.jpg?resize=600%2C421&ssl=1\")