BoG's Foreign Exchange Directive Contradicts the Recommendations of the IMF and World Bank

On August 20, 2025, the Bank of Ghana (BoG) introduced a new directive regarding foreign exchange: banks are prohibited from providing cash withdrawals in foreign currency to corporations unless those companies have previously deposited an equivalent amount in foreign exchange. While this may appear to be a measure of discipline on the surface, in reality, it constitutes economic self-sabotage.

Just weeks prior, both the IMF and World Bank had issued explicit public warnings to the BoG. On July 7, the IMF advised Ghana to lessen its significant involvement in the foreign exchange market and to implement a framework that allows the value of the cedi to be determined more by market supply and demand rather than by central bank mandates. The World Bank reiterated this on August 14, emphasizing the necessity for Ghana to safeguard foreign exchange liquidity and ensure the continuous flow of essential imports, including fuel, medicines, and raw materials.

The BoG has disregarded both warnings. Rather than easing restrictions to enhance market depth, it has imposed stricter controls, effectively cutting corporations off from the foreign exchange resources they require.

Consider an oil importer in need of $100 million. In a well-functioning market, Bank A could obtain dollars from Bank B or through a foreign exchange auction.

The BoG would only step in if market volatility escalated dramatically, for instance, if the cedi were to plummet from GHS 16/$ to GHS 20/$ within a matter of days. However, under the new regulation, that importer is excluded unless they have pre-deposited the equivalent dollars, a requirement that is not feasible and serves to contract rather than expand the market.

Alternatively, consider a Bulk Oil Distribution Company (BDC) that requires $50 million for fuel imports. Typically, a bank would utilize interbank liquidity or a BoG auction to fulfill that requirement, ensuring that petroleum supplies remain uninterrupted. Now, if the BDC does not have prior deposits, it is unable to withdraw foreign exchange. This disrupts the supply chain: fuel shortages arise, pump prices increase, and public confidence diminishes.

The contradiction is glaring:

IMF: Less intervention, more flexibility.

World Bank: Safeguard liquidity, maintain import flow.

BoG: Increased intervention, reduced liquidity, disrupted imports.