Unbacked Foreign Currency Payments to Big Businesses Banned by Bank of Ghana

The Bank of Ghana (BoG) has announced a new directive that bars financial institutions from issuing foreign currency (FCY) cash to large corporate entities without corresponding foreign currency deposits. This decision is part of the Central Bank’s ongoing efforts to protect Ghana’s foreign exchange reserves and preserve overall financial stability.

In a statement released on Wednesday, August 20, the BoG revealed a worrying trend involving large businesses—particularly Bulk Oil Distribution Companies (BDCs), mining firms, and other major corporates—engaging in foreign currency cash withdrawals that are not supported by actual FCY inflows. According to the Bank, this practice exerts unnecessary pressure on Ghana’s foreign exchange market and contributes to exchange rate volatility.

“The Central Bank has observed with concern the increasing incidence of foreign currency cash withdrawals by large corporates without matching deposits,” the statement said. “Such activity places an undue burden on the FX market and undermines the stability of the Ghanaian cedi.”

To address this, the BoG has directed all licensed commercial banks to ensure that any foreign currency cash payment to large corporates must be fully backed by equivalent foreign currency deposits from the same institution. In other words, companies must deposit the same amount of foreign currency in advance before they can access cash in that currency.

“All banks are hereby directed to discontinue the payment of foreign currency cash to large corporates unless the transactions are fully supported by equivalent FCY cash deposits lodged by the same institution,” the directive stated.

The BoG emphasized the importance of proper documentation and verification of the source of funds for all foreign currency disbursements, urging banks to tighten their internal controls and compliance systems. Institutions that fail to adhere to these requirements, the Bank warned, will face regulatory sanctions.

While taking a firm stance on this issue, the BoG also acknowledged the critical role that large corporates play in the national economy. Sectors such as petroleum distribution, mining, and large-scale imports are essential to maintaining Ghana’s industrial base and ensuring the supply of critical commodities. The Bank assured stakeholders that it has worked closely with the government to establish mechanisms that will provide adequate foreign exchange liquidity to support legitimate import and operational needs.

“These measures have been carefully designed to strike a balance between maintaining market stability and supporting key sectors of the economy,” the statement explained. “We remain committed to ensuring that genuine importers have access to foreign exchange without compromising the country’s macroeconomic health.”

To ensure a smooth implementation of this policy, the Central Bank has called on industry associations and sector leaders to inform their members about the new directive and encourage full compliance. The BoG stressed that safeguarding the integrity of Ghana’s foreign exchange market requires cooperation from both the public and private sectors.

This new policy aligns with the BoG’s broader strategy to strengthen Ghana’s monetary system by discouraging speculative forex behavior and ensuring that foreign currency transactions are transparent, justified, and traceable. Analysts believe this move could help curb unnecessary demand for foreign currency and reduce pressure on the cedi, which has faced bouts of depreciation in recent years.

The Bank of Ghana’s decision comes at a time when many emerging economies are tightening foreign exchange regulations to protect reserves amid global economic uncertainty, rising import costs, and inflationary pressures. By implementing this directive, the BoG aims to promote discipline in the financial sector, reduce systemic risk, and ensure that the country’s foreign currency resources are used efficiently.

In conclusion, the BoG’s latest directive serves as a proactive measure to safeguard Ghana’s economic stability, encourage responsible financial practices among corporates, and support sustainable growth in the long term.