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| Mr. Alex Mould. |
The former chief executive of the National Petroleum Commission, Mr. Alex Mould has revealed that, there is an imminent shortage of fuel due to the foreign exchange crunch; and the situation can be ameliorated by government’s intervention. He said this on his Facebook wall monitored by GHANA News ONLINE.
According to him, banks are reporting a scarcity of foreign exchange (FX) to honour payments of credit letters (LCs) issued to international oil companies such as BP Vitol, Trafigura, just to mention a few.
“Banks are reporting a shortage of FX to meet payments of maturing Letters of Credit (LCs) issued to international oil trading companies such as BP Vitol, Trafigura etc etc
“This is due to Bank of Ghana’s inability to meet requirements at the various FX auctions.
“Some Banks have even stopped quoting FX rates as there is simply no availability for the quantities required by the fuel importers (BDCs).”
He added that, the situation is causing Bulk Distribution Companies (BDCs) to max out their credit-line limits with their banks and the end result is that, the banks will no longer have credit lines available for the BDC’s to import fuel onwards.
“This is causing BDCs to max out their credit-line limits with their banks, and the implication is that the banks will no longer have credit lines available for the BDCs to import fuel going forward.
“Banks also are running the risk of maxing out their credit-lines with their corresponding foreign banks that confirm (or guarantee) the local banks’ trade instruments such as Documentary LCs and Standby LCs (aka Guarantees). This could prove very disastrous for the country as essential imports could come to a grinding halt.”
Mr. Mould asked government to act fast and decisive, before international banks’ credit and country risk teams begin to revise their limits to Ghana, downwards. Such an action according to him will result in an FX credit crunch, leading to an even quicker depreciation of the cedi.
“Government needs to act decisively and quickly before International Banks’ Credit and Country Risk teams start reviewing their limits to Ghana downward, if they have not already done so (since S&Ps recent downgrade - the last of the three major rating agencies to do so);
“Such actions by the ccorresponding International Banks WILL cause a FX credit crunch resulting in an even faster depreciating Cedi!!
“GoG MUST accelerate their discussions with IMF to allow a BRIDGE-PROGRAM to be put in place before the main Take-Out Program kicks in sometime in Q1 2023 as reported.”
Facebook post below:
Source: ghananews.hrforum.uk
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