Bank Of Ghana must be tough on Dollarisation of the Economy


It is fast becoming a norm for people, businesses and individuals to charge in United States Dollars for the goods they sell and the services they render in the country.
School fees, hospital bills and hospitality services are now quoted or charged in dollars, while prices for land and landed properties are also charged in dollars.
These are mostly openly advertised in the media, electronic and print, and on billboards in Accra in particular.
This phenomenon is most unfortunate because under the Bank of Ghana regulations, these quotes in foreign currency are not acceptable. People can only charge in dollars only with the express permission of the central bank because in Ghana, the legal tender is the cedi and nothing else.
It is, therefore, amazing that the central bank, which is in charge of monetary policy in the country, is allowing this to happen.
It has become increasingly evident that the Bank of Ghana seldom this illegalities as far as their operations are concerned.
We recall the inaction of the central bank in stopping the activities of some microfinance institutions in the country until the situation got out of hand.
We will be surprised if the Bank of Ghana claims it had not seen the numerous adverts demanding dollars for the services rendered or goods sold. This trend is most unfortunate and unacceptable and must be checked immediately before it gets out of hand.
In a country where people are quick to follow trends, we need to take proactive steps to prevent such things from escalating to a level where its control will be costly.
What we see in Ghana is what economists refer to as a partial dollarisation because it has not been formalised.
It is evidently clear that a high degree of partial dollarisation not only has an impact on the effectiveness and performance of economic policies, but also requires adjustments in prudential regulations.
In the 1970s, 1980s and some parts of 2000s, when macroeconomic instability and high inflation rates characterized the economy, individuals used foreign currency to keep their assets from the negative effects of inflation and uncertainty.
Much as it is known fact that countries under partial dollarisation can benefit from the promotion of financial inter-mediation and integration with international markets, it is equally worth nothing that policymakers in partially dollarized economies face several challenges.
For instance, there is an issue about the vulnerability of the financial system to capital flows and depreciation risk. It also weakens the central bank’s effectiveness as lender of last resort among many other things.
We are aware of frantic efforts being made by the government to stabilize the economy and to restore hope and confidence in the Ghanaian currency. Today, we see a currency which is partially stable and efforts are being made to even make it stronger. It is, therefore, not the best for the central bank to sit on the sidelines and watch people trade in dollars.
We believe that if for nothing at all, those companies and institutions that charge in dollars must also be made to pay salaries of their workers in the same currency. This is because it makes absolutely no sense to allow Ghanaians to toil and work for companies that charge in dollars, while they are paid in Ghana cedis.
It is our fervent hope that the Bank of Ghana will rise to the occasion as soon as practicable to stop this illegality and help restore full confidence in local currency and the economy as a whole.