The former CEO of the Ghana National Petroleum Commission, Alexander K Mould has called on the government to work on averting an imminent fuel shortage due to the foreign exchange credit crunch.
According to him, the banks are reporting a shortage of major foreign currency to meet payments of maturing Letters of Credit (LCs) issued to international oil trading companies such as BP Vitol, and Trafigura among others.
Mr. Mould said the situation is due to the Bank of Ghana’s inability to meet requirements at the various foreign exchange auctions.
“Some Banks have even stopped quoting FX rates as there is simply no availability for the quantities required by the fuel importers (BDCs).
“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,” the former GNPC boss stated.
He continued: “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).”
Mr. Mound further said that the development if not handled well by the government “could prove very disastrous for the country as essential imports could come to a grinding halt.”
“Government needs to act decisively and quickly before International Banks’ Credit and Country Risk teams start reviewing their limits to Ghana downwards 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 Corresponding International Banks WILL cause a FX credit crunch resulting in an even faster-depreciating Cedi!!.”
He also suggested that “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.”
Source: Ghana/Starrfm.com.gh/103.5FM
