Bank of Ghana’s recent directive to commercial banks to keep nine percent of their reserves with it in order to address the ‘dollarization’ of the economy has succeeded in ridding the latter’s coffers of dollars.
Most dollar account holders have withdrawn their dollars from banks to stop monthly deductions.
An expert told CITY & BUSINESS GUIDE that people who withdrew their dollars from the banks had invested them with savings and loans companies while others were allegedly keeping theirs at home.
As a result of this situation, commercial banks, over the weekend, called on the Central Bank to increase the supply of dollars to address the shortage on the market.
The Ghana Association of Bankers (GAB) called on Government to enforce the law that discouraged companies from invoicing and receiving payments in dollars to halt the depreciation of the cedi.
It further proposed measured medium to long-term measures to check the “dollarisation” of the economy and strengthen the local currency.
Some banks used to benefit a lot from the ‘dollarisation’ spree by importing huge volumes of foreign currency to service the needs of their clients.
The Central Bank recently announced plans to thoroughly carry out the provisions of the Foreign Exchange Act 2006 (Act 723) and accompanying regulations.
Even the payment of school fees, purchase of vehicles, airline tickets, mortgage loans and rent, among others, are effected in dollars.
Service providers quote exchange rates that are significantly unrealistic.
All the same, Ghana’s laws allow both residents and non-residents to operate foreign exchange accounts.
Individuals and corporate bodies operating such accounts are allowed to convert cedis into dollars and pay these monies into the foreign account.
According to Asare Akuffo, president of GAB, beyond the legal limit that allows an individual to hold $10,000, government needs to restructure the economy in a way that would reduce the high demand of the foreign exchange.
“We wish to add our voice to the demand for fiscal responsibility in this election year.
“The economy must now move into a trajectory of relatively low levels of inflation and interest rates to achieve a predictable business environment of low cost of doing business and minimal uncertainty.”
Mr Akuffo additionally appealed for effective personal identification and residential address system to help minimise credit risk.