Dr. Gideon Boako,Member of Parliament for Tano North
Member of Parliament for Tano North, Dr. Gideon Boako, has defended former Vice President Dr. Mahamudu Bawumia’s claim that the previous government operated under an International Monetary Fund (IMF)-imposed monthly cap on foreign exchange (FX) interventions.
Dr. Boako said attempts by government and National Democratic Congress (NDC) communicators to use the $3 billion FX sales figure contained in the IMF’s Fourth Review Report to dispute the existence of the cap amounted to a misunderstanding of monetary policy and the IMF programme.
According to him, there was an agreed monthly intervention ceiling of $80 million, which was later reduced to $60 million, as part of measures to rebuild Ghana’s international reserves.
“There was an agreed intervention cap, scaling down from $80 million to $60 million,” Dr. Boako stated.
He explained that the previous administration adhered to the arrangement, resulting in Ghana exceeding its reserve build-up target by the end of 2024.
Dr. Boako argued that the country’s performance under the reserve accumulation programme subsequently gave the IMF the confidence to relax the restriction and permit the Bank of Ghana to intervene beyond the $80 million and $60 million limits.
He further explained that the absence of the specific intervention ceiling from published IMF reports should not be interpreted as evidence that no such arrangement existed.
“Market-sensitive details are redacted from IMF publications,” he said, adding that publicly disclosing the intervention ceiling could expose the cedi to speculative attacks because market participants would know the limits of the central bank’s capacity to intervene.
Dr. Boako also challenged claims that the $3 billion in FX sales recorded in the IMF report represented direct FX intervention by the Bank of Ghana.
He said the figure comprised different categories of foreign exchange operations, including the FX Auction and FX Intervention budgets, and, in more recent IMF reports, an intermediation budget.
“The $3 billion figure confuses FX Auction with FX Intervention,” he stressed.
According to him, FX auctions are pre-announced and rules-based, while FX interventions are discretionary measures undertaken by the central bank to smooth excessive volatility in the foreign exchange market.
He therefore cautioned against dividing the $3 billion total by 12 months and presenting the resulting figure as the average monthly FX intervention.
“It is therefore wrong to divide $3 billion by 12 and call it proof of intervention,” Dr. Boako said.
He maintained that the distinction between the various FX windows was essential to properly understanding the IMF programme and the Bank of Ghana’s foreign exchange operations.
Source: Ghana/otecfmghana.com
