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BoG bans pricing in foreign currencies

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BoG bans pricing in foreign currencies

BoG bans pricing in foreign currencies

The financial sector regulator, Bank of Ghana (BoG), has prohibited the pricing, advertising and receipt or payment for goods and services that are contracted locally in any foreign currency.

In a release issued and signed by Alethea Godson-Amamoo on behalf of the Secretary to the BoG, the central bank cautioned companies, institutions and individuals against dealing in the business of foreign exchange without authorization from the bank.

“The general public is hereby reminded that the Foreign Exchange Act, 2006, (Act 723) prohibits the pricing, advertising and receipt or payment for goods and services in foreign currency in Ghana.

The sole legal tender in Ghana is the Ghana Cedi and the Ghana pesewa,” the release indicated.

According to the statement, persons found to have violated the directive would face summary conviction, a fine of up to seven hundred penalty units or a prison term of not more than eighteen months, or both.

The move from the BoG is expected to tackle the surging dollarization of the economy where charges for various goods and services that are procured locally are being quoted in dollars and other foreign currencies at the expense of the Ghana cedi.

BoG Governor, Dr Ernest Yedu Addison, hinted in September last year that his outfit was going to push this regulation in favour of the local currency.

“We will enforce the law because we are concerned about that so we intend to strengthen the communication on the rules relating to pricing for the industry,” he had said at that MPC meeting.

Real estate developers, service providers in the hospitality sector, architectural and legal consultancies, some private schools and automobile dealers often charge in foreign currencies.

According to economists, the pricing of goods and services in foreign currencies — or dollarisation of the economy — is a key contributor to the depreciation of the local cedi, inflation and macroeconomic instability.

To some financial analysts, the situation has resulted in the plummeting value of the local currency against the US dollar and other major trading currencies.

In March this year, the government had to inject some $800 million into the economy in an attempt to stabilize the cedi, which was trading over GH¢5.50 to the dollar.

Source: Myjoyonline.com

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6 arrested by National Security over illegal gold business

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6 arrested by National Security over illegal gold business

Some six individuals have been arrested by National Security officers in Kumasi, Ashanti Region for allegedly engaging in the illegal gold business.

Operatives of the National Security, who had the necessary permits, made the arrests.

The suspects have been transferred to the National Security headquarters in Accra for further interrogation.

Kojo Oppong Nkrumah who is the Minister for Information confirmed the arrest at a news conference in Kumasi yesterday but did not give further details.

The Minister also talked about the security situation in the country and said the government was doing everything practicable to ensure that the country was safe.

He said the government had shown good faith by retooling the security agencies and recruiting more men and women to beef up the security of the state.

Matters of security, he said, were critical to national development and would, therefore, be tackled with all urgency.

Source: primenewsghana.com

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Contractors going bankrupt; pay them – Nduom

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Contractors going bankrupt; pay them – Nduom

The Chairman of Groupe Nduom, Dr Papa Kwesi Nduom, has said the delay by the government in paying local contractors, some of whom, he said, are customers or investors, has led to the lock-up of GHS2.2 billion from the Groupe’s Gold Coast Fund Management, alone.

“When we keep fighting for Ghanaian contractors to be paid, we are fighting for customers/investors to get their money. How much? GHS 2.2 billion is currently locked up in the process from Gold Coast Fund Management alone”, Dr Nduom wrote on social media Saturday, 10 August 2019.

Other Ghanaian financial institutions, he said, “Have funds locked up in infrastructure projects. The contractors are going bankrupt. The customers have it worse. They are suffering. When a contractor is not paid after three years of completing a job, the financial institution does not get paid. The customers who invested their monies with the financial institutions don’t get paid”.

“Who should fund infrastructure – roads, bridges, schools, etc. – in Ghana?”, the former presidential candidate asked, adding: “Gold Coast has been doing it for 15 years. Over 14 billion Ghana Cedis invested. Now with a portfolio of 2.2 billion Ghana Cedis”.

“It is the government that stopped giving advance payment to contractors and asked them to pre-finance projects. Gold Coast stepped in to support our indigenous Ghanaian contractors and has funded over 600 projects. This is a good thing the company has done.

“Our concern is to get the payment process going so contractors can complete projects, get them certified, get paid so they can pay back what they owe to Gold Coast so that Gold Coast can pay back money to its customers/investors.

“This is not Nduom’s money. It is not politics. It is pocket-level economics. The money is in Ghana with government agencies and in infrastructure projects”, he said.

Dr Nduom added: “This is not the only investment made by Gold Coast, which is why it paid back over 1 billion Ghana cedis in 2018 and has paid about GHS100 million this year”.

Recently, a coalition of local contractors threatened to lock all public schools and facilities they built if the government delayed further in paying them their funds.

Source: classfmonline.com

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CBOD petroleum price outlook: Refined products review and outlook

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CBOD petroleum price outlook: Refined products review and outlook

The international market prices of gasoline and gasoil averaged $648.98/mt and $584.73/mt respectively in the first pricing window of July (12th-26th July 2019), $5.70/mt lower than the previous window in the case of gasoline and $0.89/mt higher than the previous window for gasoil.

These prices (12th-26th July) were 29% and 7% higher than average prices observed in the beginning pricing window of the year. Average international market prices have been sporadic during the year, starting the first window of January at $504/mt for gasoline and $545.63/mt for gasoil.

Prices for gasoline and gasoil peaked in the first selling window of June at $749.68/mt and $639.88/mt respectively. This was 49% and 17% higher than the prices observed in the first window of January 2019.

International market prices are expected to drop between 1%-2% for both gasoline and gasoil in the second pricing window of July (27th July-11th August 2019). This is attributable to the ongoing trade war between USA and China which has slowed the growth in China’s demand.

FuFeX60

The forward FX rate (FuFeX) used is the average of the quoted indicative forward forex rate from major oil financing banks adjusted by the covered-interest parity pricing model. The FuFex60 is computed as the average 60-day forward fx rate of selected major oil financing banks. The Fufex60 to be applied for the first selling window of August 2019 is Ghs5.60/USD.

The adoption of a FuFeX30 (30-day forward rate) instead of FuFeX60 can reduce pump prices by about 2%. It is therefore necessary that BDCs revise their trade credit tenor downwards to help reduce consumer prices at the pump.

The Ex-refinery Price Indicator (Xpi)

The Ex-ref price indicator (Xpi) is computed using the referenced international market prices as observed to be usually adopted by BDCs, factoring the CBOD economic breakeven benchmark premium for a given window and converted from USD/mt to Ghs/ltr using the FuFeX.

Source: CBOD

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