The Bank of Ghana (BoG) is confident of boosting its reserves by half a billion US dollars from miners, oil and gas-producing firms and other major exporters between now and December.
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.
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’s reserves in the midst of rising demand and a depreciating cedi that is attributable to weak buffers.
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’s first week.
He said the purchase and the pledges brightened the bank’s optimism that the programme would successfully bolster the central bank’s reserve position.
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.
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.
It followed a dry-up in flows from the traditional Eurobonds although demand continued to soar.
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.
“This will strengthen the central bank’s forex auctions,” the bank said.
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.
Data from the Ghana Chamber of Mines (GCM), however, shows that mineral exports bring in an average of US$5 billion per annum, of which gold is the lead earner.
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