The foreign exchange (FX) control measures put in place last year in response to dwindling reserves at the time have been reversed, according to plans made public by Bank of Ghana (BoG) Governor Dr. Ernest Addison.
For example, many non-critical or essential commodities including rice, poultry, vegetable oils, toothpicks, pasta, fruit juice, bottled water, and ceramic tiles were no longer eligible for foreign exchange support. The central bank will support a single FX market going forward.
According to the IMF’s staff report, the decision to annul such measures came after a 36-month arrangement under the IMF’s US$3 billion Extended Credit Facility (ECF) was approved. The Bank of Ghana is dedicated to putting the required measures and reforms into place to guarantee a single exchange rate market.
Following the 112th Monetary Policy Committee (MPC) meeting, Dr. Addison reiterated the central bank’s stance in favor of a single foreign currency (FX) market.
“We disrupted the unity of the FX market last year when we implemented the foreign exchange control measures to restrict access to FX for certain commodities,” he said. Due to the environment we would be dealing with in 2022, certain actions in crisis management were put into place. Although the restrictions on FX resources are expected to loosen when things return to normal, we do not anticipate keeping them in place.
Gross reserves increased slightly in April, from US$5.1 billion in March to US$5.2 billion, according to the central bank’s assessment of economic and financial data. This accomplishment was acknowledged in the MPC statement, which also stated that by May 19, reserves had increased to US$5.7 billion, or 2.6 months’ worth of import coverage. However, this amount is below what the IMF advises.