Ghana's central bank assures adequate reserves to meet foreign exchange demand

By Justice

ACCRA, May 27 (Xinhua) -- Ghana's central bank assured on Monday that it has ample reserves to meet the growing demand for foreign exchange in the country, despite persistent pressure on the local currency.

Speaking at a press briefing, Bank of Ghana Governor Ernest Addison said that the central bank has increased its reserves by more than 2 billion U.S. dollars since the beginning of the economic reforms supported by the International Monetary Fund (IMF) a year ago.

These new funds include disbursements from the IMF and additional support from the World Bank, the bank's own dollar purchases, and other sources, Addison added.

He attributed the recent pressures in the forex market to the government's arrears payments to independent power producers, other government capital expenditures, higher imports and other factors. The governor also noted increased pressure from importers using informal channels to buy forex, leading to speculation in the market.

"These conditions have fed into sentiments and contributed to additional pressures. On a year-to-date basis, the Ghanaian cedi (local currency) depreciated by 14.6 percent against the dollar as of May 22, 2024, compared to 21.8 percent depreciation for the first five months of 2023," he said.

Despite these challenges, Addison said, "The Bank of Ghana has adequate reserves to manage these shocks to the foreign exchange market, having added over 600 million U.S. dollars to the current foreign exchange reserve levels over the first five months of the year."

He said that an expected 360-million-dollar third tranche disbursement from the IMF later in June will further strengthen the bank's reserve position.

Moreover, the improved reserve position is supported by strong liquid monetary gold levels of over 26.6 tons, estimated at 2.1 billion dollars, resulting from a successful domestic gold purchase program, Addison added.

With reserves sufficient for more than three months of import cover, the governor affirmed that the central bank remains fully committed to providing stability in the exchange rate of the cedi.

In recent years, Ghana has faced an economic crisis marked by ballooning public debt, high inflation, exchange rate volatility and unemployment. Last year, the country secured a 3-billion-dollar loan from the IMF, aiming to revive the economy.

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