Kofi Bentil: BoG’s decision to halt forex support for import of rice, oil, others bad
Kofi Bentil, the vice-president of IMANI Africa has described the decision by the Bank of Ghana (BoG) to halt forex support for imports of some eight items as a bad move which will badly affect the poor.
The items include rice, poultry, vegetable oil, toothpicks, pasta, fruit juice, bottled water, ceramic tiles and other non-critical goods.
The move, according to the central bank, is in accordance with the president’s directive, issued in his recent address on the Ghanaian economy, made to the nation on Sunday 30 October 2022.
An electronic message from the Bank of Ghana to banks in the country said: “in accordance with the president’s directive, issued in his recent address to the nation on the Ghanaian economy on Sunday 30 October 2022, the Bank of Ghana will no longer provide FX support for the imports of rice, poultry, vegetable oils, toothpicks, pasta, fruit juice, bottled water, ceramic tiles and other non-critical goods.
“Please be advised and act accordingly,” the Bank said.
Reacting to the development on Facebook, Bentil said the policy will force importers to rely on the open market for forex adding that it will drive up prices of goods.
Below is the full post:
THE GOVT AND BOG. HAVE DECIDED TO STOP SUPPORTING THE IMPORTATION OF STAPLE FOODS THAT GHANA IS UNABLE TO PRODUCE IN THE RIGHT QUANTITIES.
Another round of policy incoherence has been unleashed. We will all suffer especially the poor.
You support essentials whose price increase will affect the poor. toothpicks, pasta, fruit juice, bottled water and ceramic tiles are NOT essential. You don’t need to support their imports!!
BUT rice, poultry, vegetable oils, are essential. You need to support those.
You can’t produce enough so support imports to ensure reasonable prices.
If you withdraw support. You haven’t reduced demand, you’ve just created shortage, so The importers will buy FOREX from the open market and drive-up FOREX rates. And that will also drive-up prices of these essentials and everyone will suffer especially the poor.
The above is derived from simple understanding of economics and policy analysis.
