The ex-Chief Executive of the National Petroleum Authority (NPA) has raised alarm on the inability to arrange for foreign exchange for fuel importers and distributors in the country, saying sooner than later, the country could grind to a halt as result of fuel shortage.
According to Alexander K Mould “Banks are reporting a shortage of foreign exchange (FX) to meet payments of maturing Letters of Credit (LCs) issued to international oil trading companies such as BP Vitol, Trafigura among others.
“This is due to BoG’s inability to meet requirements at the various FX auctions, he said in a text circulated over the weekend, adding “Some Banks have even stopped quoting FX rates as there is simply no availability for the quantities required by the fuel importers (BDCs).
The former Chief Executive Officer (CEO) of Ghana National Petroleum Corporation (GNPC), noted that “this is causing BDC‘s 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 BDC’s 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 otherwise known as Guarantees.
“This could prove very disastrous for the country as essential imports could come to a grinding halt.
He asked that the Akufo-Addo “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.
“Government of Ghana must accelerate their discussions with the 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.
