Alex Mould, a former CEO of the National Petroleum Authority, has warned that there may be a fuel scarcity in the nation if the government does not act quickly to provide foreign currency to the banking sector.
A former executive director of Standard Chartered Bank, Mr. Mould said that banks are not supplying enough foreign currency to cover the maturing Letter of Credits (LCs) they had granted to international gasoline dealers.
“The banks are wailing that the Bank of Ghana is unable to meet the needs of its trading partners through its forex auctions by offering enough foreign currencies, particularly the US dollar.
According to the petroleum and banking specialist, “this is driving BDC’s to max out on their credit-line limits with their banks, and the implication is that the banks will no longer be able to fund gasoline imports by October.”
“The current scenario, if left unattended to, might be disastrous for the nation since this could set off a domino effect and perhaps cause imports of necessary goods to halt completely.
It may be a gloomy Christmas this year because of the impending lack of food items like rice, sugar, protein foods (fish, meats), and bread goods, he said.
Mr. Mould suggested that, in order to improve the situation, “government needs to act decisively and quickly before International Banks’ Credit and Country Risk teams start reviewing downwards their Country-limits to Ghana, if they have not already done so since S&P’s recent downgrade – the last of the three major rating agencies to downgrade Ghana this year.”
Such measures by the foreign partners of the local bank will result in an FX credit crisis and Ghanaian importers defaulting to their suppliers. This would merely cause a rush for the limited foreign currency, which might send the cedi free-falling.
“GoG’s sole option is to expedite its discussions with the IMF to immediately enter into a Bridge-program while working on the main Take-Out Program, which sources believe will kick in somewhere in the first quarter of 2023,” according to the report.