Economic Context and Rationale
The BoG’s directive responds to a growing practice where large corporates withdraw substantial amounts of foreign currency without corresponding deposits, a trend that exerts “avoidable pressure” on the foreign exchange market and undermines efforts to stabilize the cedi.
Reports indicate that some firms have engaged in speculative activities, such as hoarding dollars or transferring funds between accounts to exploit exchange rate fluctuations.
Such practices artificially inflate demand for foreign currency, weakening the cedi and straining Ghana’s foreign exchange reserves.
Ghana’s economy has shown resilience in 2025, with the cedi rallying 40.7% against the US dollar, making it one of Africa’s best-performing currencies.
The country recorded a current account surplus of US$3.4 billion in the first half of 2025, driven by strong gold and cocoa exports, and foreign exchange reserves rose to US$11.1 billion, covering 4.8 months of imports.
However, persistent demand for foreign currency, particularly from large corporates in petroleum and mining sectors, threatens these gains.
The BoG’s directive seeks to enforce discipline by ensuring that FCY withdrawals are backed by legitimate deposits, thereby reducing speculative pressure and promoting transparency in forex transactions.
The central bank has also partnered with the government to ensure liquidity for legitimate import obligations, emphasizing its commitment to supporting critical sectors like petroleum supply and mineral exports.
By requiring banks to maintain detailed records of FCY transactions, the BoG aims to enhance accountability and prevent leakages into the black market, a recurring challenge in Ghana’s forex management.
Economic Implications
The directive’s immediate effect is to tighten access to foreign currency for large corporates, particularly those reliant on cash-based transactions. For BDCs and mining firms, which often require significant FCY for imports or repatriation of profits, this could create operational challenges.
For instance, a BDC seeking $50 million for fuel imports may face delays or outright denial of funds if it lacks equivalent deposits, potentially disrupting supply chains and driving up pump prices. Such disruptions could ripple through the economy, increasing costs for consumers and businesses alike.
However, the directive could also yield positive outcomes. By curbing speculative withdrawals, it may stabilize the cedi, which has fluctuated between GH¢10.3 and GH¢10.95 after a high of GH¢14.7 earlier in 2025.
A stronger cedi enhances purchasing power, reduces import costs, and supports macroeconomic stability, which is critical for a country heavily reliant on imported goods.
Additionally, the emphasis on documentation aligns with global standards for financial transparency, potentially strengthening Ghana’s reputation in international markets.
Critics, including the Africa Policy Lens (APL), argue that the directive is “draconian” and risks pushing firms toward black-market transactions.
They question how corporates, particularly those not generating FCY revenue, can comply with deposit requirements.
For example, BDCs selling fuel in cedis may struggle to amass FCY deposits, potentially forcing them to seek informal channels, which could undermine the BoG’s goal of market stability.
Moreover, the directive appears to contradict recent IMF and World Bank recommendations to reduce central bank intervention and deepen the FX market through supply-demand mechanisms. This divergence could signal policy inconsistency, raising concerns among stakeholders.
Impact on Foreign Direct Investment
FDI is a cornerstone of Ghana’s economic growth, with sectors like mining, oil, and agriculture attracting significant inflows. In 2024, FDI was bolstered by Ghana’s stable macroeconomic indicators and investor-friendly reforms. However, the BoG’s directive could have a mixed impact on investor confidence.
On one hand, the directive signals a commitment to fiscal discipline and currency stability, which are attractive to foreign investors. A stable cedi reduces exchange rate risks, protecting returns on investment.
The BoG’s assurance of liquidity for legitimate imports further mitigates concerns about access to FCY for critical operations, such as importing equipment or raw materials. These measures align with the broader goal of safeguarding Ghana’s external position, which is vital for maintaining investor trust.
On the other hand, the directive introduces operational constraints that could deter FDI. Large corporates, particularly in mining and oil, rely on flexible access to FCY for repatriating profits or settling international obligations.
The requirement for prior deposits and extensive documentation increases transaction costs and bureaucratic hurdles, potentially discouraging investors who prioritize ease of doing business.
As Professor Eric Oteng-Abayie noted, policies that create delays or uncertainty can erode investor confidence, especially in a competitive regional market where countries like Côte d’Ivoire and Nigeria are vying for FDI.
The risk of driving businesses to the black market is another concern. If corporates resort to informal channels to access FCY, it could foster perceptions of regulatory overreach and market inefficiency, further undermining Ghana’s attractiveness as an investment destination.
Historical precedents, such as the failed 2014 forex restrictions, suggest that overly restrictive measures can backfire, leading to capital flight and reduced FDI.
Balancing Stability and Growth
The BoG’s directive reflects a delicate balancing act between stabilizing the cedi and supporting economic growth.
While it addresses legitimate concerns about speculative withdrawals, its success depends on effective implementation and complementary reforms. To mitigate adverse effects, the BoG could consider the following:
- Phased Implementation: Gradually rolling out the directive with clear transition periods would allow corporates to adjust their cash management practices, reducing the risk of supply chain disruptions.
- Enhanced Liquidity Mechanisms: Expanding access to FCY through BoG auctions or interbank markets could alleviate liquidity constraints for legitimate imports, addressing concerns raised by the IMF and World Bank.
- Stakeholder Engagement: Consulting with industry associations and corporates could help refine the directive to reflect operational realities, minimizing the risk of black-market activity.
- Transparent Pricing in Cedis: Encouraging government agencies and private entities to price transactions in cedis, as suggested by some analysts, would reduce artificial demand for FCY and align with the directive’s goals.
Conclusion
The Bank of Ghana’s directive to halt unbacked FCY payments to large corporates is a bold step toward stabilizing the cedi and enhancing transparency in the foreign exchange market.
By curbing speculative withdrawals, it aims to protect Ghana’s hard-earned macroeconomic gains, including a stronger cedi and robust reserves.
However, the directive’s restrictive nature risks disrupting critical supply chains and deterring FDI by increasing operational costs and uncertainty.
To maximize its benefits, the BoG must balance discipline with flexibility, ensuring that legitimate business needs are met without compromising investor confidence.
As Ghana navigates this policy shift, its ability to maintain a stable yet open investment climate will determine its success in sustaining economic growth and attracting FDI in an increasingly competitive global landscape.
Kwame Owusu Danso, Esq. (BSc, LLB, BL, Dip.L, LLM) is a legal and economic analyst specializing in financial regulation and international investment.
