Fuel Shortage as Forex Crisis Hits Banks – Alex Mould

Fuel Shortage as Forex Crisis Hits Banks – Alex Mould

Alex Mould, a former Chief Executive Officer of the National Petroleum Authority (NPA), has warned of a fuel shortage in the country if the government does not intervene immediately in providing foreign exchange to the banking sector.

Mr. Mould, a former Executive Director of Standard Chartered Bank, claims that banks are not providing enough foreign currency to meet the maturing Letter of Credits (LCs) issued to international fuel traders.

He said in an interview, “This is causing BDC‘s 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.”

He added, “The, current situation, if not addressed, could prove disastrous for the country as this could trigger a domino effect and  even imports of essential commodities could come to a grinding halt. As it stands, not only fuel shortage is imminent, but food items such as rice, sugar, protein food (fish, meats) and bakery products; “it could be a bleak Christmas this year.”

To salvage the situation, Mr Mould suggested that the government act decisively and quickly before International Banks’ Credit and Country Risk teams start assessing their country-limits to Ghana, if they have not already done so since S&P’s recent downgrade – the last of the three major rating agencies to downgrade Ghana this year.

Such actions by the local bank’s international partners will result in a FX credit crunch, resulting in Ghanaian importers defaulting on their suppliers. This would only cause a rush for scarce foreign exchange, potentially sending the cedi into free fall!

He further stated that the only option for the government of Ghana is to speed up discussions with the IMF in order to enter into an immediate Bridge-program while working on the main Take-Out Program, which sources say will begin in the first quarter of 2023.

Source: Energy Ghana

 

 

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