Bank of Ghana is reaching out to exporters in the country to repatriate their export proceeds to Ghana to help shore-up the depleting foreign exchange reserves.

The move, the central bank believes, will also help to maintain a balanced external account, prevent trade imbalances, and contribute to currency stability to drive the country’s developmental agenda.

The call comes at a time when the country’s foreign exchange reserves has fast depleted, raising concerns about how the situation can turn around to ensure continuous funding for imports of critical commodities.

For instance, at the end of August 2023, Gross International Reserves (excluding encumbered assets and petroleum funds) stood at US$2.1 billion equivalent to 1.0-month import cover, compared with US$1.5 billion (0.6 month of import cover) recorded at the end of December 2022 according the quarter three Monetary Policy Committee report. 

Gross reserves, broadly defined to include encumbered assets and petroleum funds, as at the end of August 2023, also stood at US$5.1 billion.

With the situation getting dire, the government is feverishly awaiting the second tranche of the International Monetary Fund (IMF) bailout release of $600 million and the syndicated cocoa loan of $800 million to boost its reserves.

Justification

Justifying the call by the BoG, Chief Manager, Foreign Global Transfer and Remittance at the Bank of Ghana (BoG), Eric Hammond, shared some statistics to back the position of the central bank, saying evidence had proven that about 90 per cent of commodities consumed in the country were imported yet the proceeds did not come back into the economy.

“Ghana is targeting US$25 billion from export by the year 2029 and of what benefit is this target if we are not repatriating export proceeds to drive the developmental agenda of the country,” he said at the 10th sensitisation workshop on BoG’s Letter of Commitment (LoC) requirement for the repatriation of export proceeds today (December 7) in Accra.

“We pay for them from proceeds from export exchange. If we don’t do something about repatriation of foreign exchange earnings, we will not be able to build up our reserves to support our local economies and get the needed foreign exchange to embark on our socio-economic development by way of infrastructure of the country,” he said.

Mr Hammond explained that when a country exports goods or services, it earns revenue in foreign currencies where the repatriation of these export proceeds involves bringing these foreign currencies back into the country. 

He said as exporters exchange foreign currencies for the domestic currency, it increases the demand for the national currency in the foreign exchange market.

This heightened demand, he said, can lead to a stronger exchange rate for the Ghana cedi which in turn benefits the country by making imports cheaper and exports more competitive, fostering a positive trade balance. 

Furthermore, the accumulated foreign exchange reserves, he said, can serve as a buffer against economic shocks and provide stability in the face of international financial fluctuations.

Export trade

The Head of the Shippers’ Services and Trade Facilitation Department at GSA, Monica Josiah, said export trade played a pivotal role in shaping economies, and the contribution of exporters in Ghana was notable in that.

She explained that key among the benefits of export trade was the generation of foreign exchange revenue, an essential determinant of the strength of a country’s currency. 

“Indeed, all the developed countries and superpowers today rely on export trade and the conscientious repatriation of the proceeds to build their nation. Therefore, the direct correlation between the repatriation of export proceeds and national development cannot be discounted,” she said.

“It is essential to state that all these interventions will have a minimal effect on our much needed national development if deliberate policies are not implemented to ensure that proceeds from export of Ghana’s resources are repatriated,” Mrs Josiah said.

She said since 2019, GSA has created platforms in various regions of Ghana for BoG officials to provide information and sensitise exporters on LoC.

Loc

The LoC is a web-based export document that is generated by exporters from the Integrated Customs Management System (ICUMS) portal to accompany all exports from Ghana. 

The Central Bank since July 2016 incorporated the LoC into the electronic export monitoring platform to track export proceeds.

Since its inception, the BoG LoC requirement has generated tremendous interest, mainly due to the sanctions associated with its non-conformity.

Engagement with diverse key stakeholders have contributed the non-conformity to the lack of awareness of the requirement on the part of exporters and the unprofessional conduct of some shipments of other exporters on their blind side.

The workshop organised by the Ghana Shippers’ Authority (GSA) in collaboration with BoG brought together relevant stakeholders in the export value chain to discuss and understand the benefits of LoCs as well as address the concerns of exporters.

Source: GraphicOnline