Bank of Ghana eases foreign exchange restrictions

ACCRA, June 13 Fri Jun 13, 2014 11:37am EDT

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ACCRA, June 13 (Reuters) - Ghana's central bank will relax foreign exchange curbs it had imposed in February to try to halt a slide in the cedi, saying on Friday it will allow limited foreign currency transactions for domestic services.

Benjamin Amoah, head of financial stability, said the bank would also ask the government to direct mining and oil firms to operate retention accounts in Ghana to boost foreign exchange inflows.

Central bank Governor Henry Kofi Wampah had flagged plans to ease FX restrictions to Reuters in a telephone interview on Thursday.

The original restrictions included a directive that foreign exchange bought for settlement of import bills should be lodged in a special margin account to be drawn within 30 days. The bank also stipulated that the proceeds from exports should be converted into cedis within five working days.

There was also a suspension of cash withdrawals and payment in foreign currencies.

But many, including the International Monetary Fund, have said the measures were ineffective. The cedi has plunged 28 percent this year due to import demand and fiscal weakness.

"After a thorough assessment of the measures introduced in February, and analysing available data, inward remittances and forex deposits, the Bank of Ghana has decided to make these changes while we continue to monitor developments," Amoah said.

He denied that the central bank acted under pressure.

The central bank reversed a 60-day mandatory repatriation of export proceeds and their conversion into cedi within five days, Amoah said. However restrictions on the use of cheques for the withdrawal of foreign currency will remain in force, he added.

He said foreign currency account holders could now withdraw cash over-the-counter of $1,000 per transaction and a single lump sum withdrawal of up to $10,000 before leaving for travel abroad.

In addition, service providers such as hotels and schools can now accept payment in foreign currency, Amoah said, adding that the changes will come into effect June 16.

"The bank wishes to emphasise that foreign exchange is freely transferable to meet legitimate external payment obligations," he added. (Reporting by Kwasi Kpodo; Editing by Joe Bavier/Ruth Pitchford)

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