An advisor to the Bank of Ghana (BoG), Dr. John Kwakye, has clarified that the central bank’s supply of foreign exchange to the market is intended to support economic transactions and should not be misconstrued as excessive market intervention.
According to him, the bank receives and manages a significant share of the country’s foreign exchange inflows, including proceeds from gold and cocoa exports, selected remittances, as well as government borrowing and disbursements from multilateral institutions such as the International Monetary Fund and the World Bank.
Speaking to the media on the sidelines of a Strategic Policy Session on De-risking Ghana’s Gold Trade, Dr. Kwakye explained that the central bank supplies forex to meet legitimate demand, particularly for imports and government debt servicing.
He argued that withholding these inflows without releasing them into the economy would restrict access to foreign exchange and negatively impact economic activity.
“We have to release foreign exchange into the system. For those importing goods into the country or for government loan repayments, we must provide the foreign exchange. You cannot interpret all that we supply to the market as intervention,” he said.
Dr. Kwakye further stressed that such transactions are better described as intermediation rather than intervention, since the bank is required to channel foreign exchange back into the system.
“We cannot sit on these reserves and starve the economy of foreign exchange. We call it intermediation, in the sense that you have to supply foreign exchange back into the system. At the same time, we are monitoring our reserve levels. As long as we are not depleting them but rather building them, we cannot say we are pumping too much foreign exchange into the economy merely to stabilise it,” he added.
