'RECOGNISING EXCELLENCE IN GHANA’S MINING INDUSTRY FOR SUSTAINABLE DEVELOPMENT’ - BOG GETS TOUGH WITH FOREX SALES

The Bank of Ghana (BoG) has directed mining companies operating in the country to submit all documentations on the sale of their forex to the commercial banks.

This is to ensure proper monitoring of export receipts and liquidity in the forex market and maintain the macroeconomic stability and sustainable development.

The Second Deputy Governor of the BoG, Dr Johnson Asiama, who announced this at the Second Ghana Mining Industry Awards in Accra last Friday, explained that the move to track the export receipts of mining companies was to boost liquidity in the foreign exchange market.

“We remain committed to delivering on our price stability mandate by ensuring low inflation and a stable exchange rate regime to ensure that you can operate in an environment of macroeconomic stability,” he said.

The award ceremony was on the theme: ‘Recognising excellence in Ghana’s mining industry for sustainable development’.

The central bank, in July this year, relaxed its forex rules by allowing exporters to sell portions of their export receipts directly to the commercial banks in an attempt to boost foreign exchange liquidity on the market and hold the cedi firm.

 This latest move by the bank is expected to strengthen and develop the foreign exchange market, which had seen the cedi cumulatively depreciate by 4.3 per cent against the US dollar between January and October 2016, compared with cumulative depreciation of 15.5 per cent in the same period last year.

The deputy governor said despite the central bank’s aversion to the existing stability agreements, the mining sector continued to repatriate significant amounts of its export earnings.

From 2010 to date, the mining sector has repatriated about 64 per cent of its total export earnings, made up of 17 per cent mandatory repatriation and 47 per cent  voluntary repatriation.

Exceeding gold revenues

The projected revenue of US$3,328 million from gold for this year has been exceeded since September and it is expected to hit over US$4.5 billion in export revenues by the end of the year.

“I am looking forward anxiously to the day we will do away with stability agreements and obtain 100 per cent repatriation, even though the current level of repatriation is commendable,” Dr Asiama said.

According to the deputy governor, the impact of the mining sector was not only felt in the external sector but it was also the leading taxpayer to the government.

Mining contributions

“The sector contributes GH¢1 billion each year in corporate taxes, royalties, PAYE, VAT and dividends. The contribution in 2015 was GH¢1.56 billion. This is also very commendable and should be sustained,” he stated.

He said improvement in the macroeconomic indicators was expected to support mining sector operations by making investment in the sector more profitable and internationally competitive with access to cheaper funds.

Lowering policy rates

Dr Asiama hinted that as the rate of inflation declined, the BoG would consider lowering the policy rate further and signal to commercial banks to reduce their lending rates.

“This, coupled with fiscal consolidation and a gradual withdrawal of the government from the money market, will make funds available to mining companies at relatively lower cost,” he added.

He said he was hopeful that the mining sector’s contribution to the economy would increase with the establishment of auxiliary industries, especially gold refineries, diamond cutting and polishing firms, aluminium plants.

He, therefore, called on mining companies to support the government’s vision of creating an integrated mining industry.

 He said as the government worked to improve the country’s energy supply, mining firms should start developing an integrated mineral industry for sustainable development.

“For sustainable economic development in the face of fluctuating primary commodity prices, it is imperative that we process most of our minerals before export,” Dr Asiama said.

 The awards night saw mining giant Newmont Ghana Gold, Ahafo operation, clinching the coveted Mining Company of the Year award

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