Ghana risks shortage of petroleum products if government fails to act fast – Alex Mould
Ghana risks fuel shortage according to Mr Alex Mould, former Chief Executive Officer of the National Petroleum Authority if the government does not institute the necessary measures to as a matter of urgency provide foreign exchange for the banks.
The former Chief Executive Officer of Standard Chartered Bank also complained that the banking sector is being deprived of the adequate foreign currency it requires to fulfil the maturing letter of credits given to international fuel traders.
“The banks are crying out that the Bank of Ghana is not able to provide enough foreign currencies (especially the US dollar), through its forex auctions, to meet their trading partners’ needs.”
“This is causing BDCs to max out on their credit-line limits with their banks, and the implication is that the banks will no longer be able to finance fuel imports by October,” the petroleum and banking specialist said in an interview.
He hinted that if the issue is not resolved, it could lead the country to a disaster, triggering a domino effect which could also affect importations of other essential commodities. He said the current situation does not only threaten fuel importation but also food items such as rice, sugar, protein food (fish, meats) and bakery products.
Mr Mould said the “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&Ps recent downgrade – the last of the three major rating agencies that have downgraded Ghana this year”.
He indicated that such a move by international partners of the local banks could lead to an FX credit crunch, and defaults by Ghanaian importers to their suppliers and cause a scramble for the scarce foreign exchange which could trigger the spiralling free fall of the Cedi.
“Government of Ghana’s only choice is to accelerate their discussions with IMF to enter into an immediate Bridge-program whilst working on the main Take-Out Program, which sources suggest will kick in sometime in the first quarter of 2023.”
