Paying dollars for car duties contributing to cedi depreciation – Automobile Dealers Union

Importers of used cars in Ghana are facing a significant financial challenge due to the government’s policy of imposing import duties in US dollars.

The president of the Automobile Dealers Union, Eric Boateng, highlighted the impact of this policy on the car import business.

During an interview with Bernard Avle on the Citi Breakfast Show on Wednesday, May 15, Mr. Boateng explained that while the prices of certain cars remain stable on the international market, the imposition of duties at the port, particularly in dollars, greatly affects the car business in the country.

“Even the COVID… they said there is no more COVID but we are paying COVID levy, COVID transfer levy, network charges, and a lot of import duties we are paying currently. Our currency is in Cedis but if you import the car from maybe Canada, Korea or Dubai, the government of Ghana will convert the duties into dollars for you to pay.

“… So, if you buy a car from the USA for about $1000 and you bring it to the port, you will end up paying five times that in dollars,” he stated.

Meanwhile, the practice of levying import duties in dollars contradicts the provisions of the Foreign Exchange Act of the Bank of Ghana, Act 2006 (Act 723), which prohibits unauthorized foreign currency dealings by the public.

Currently, a dollar is selling at GH¢14.90 on the forex market, significantly higher than the GH¢10.97 it was sold for during the same period in May 2023.

Bloomberg reports that the depreciation of the Cedi is worsened by a decrease in cocoa earnings, with exports declining by about $500 million in January and February 2024 due to adverse weather conditions and the swollen shoot disease.

The Bloomberg report also indicates that the current depreciation reflects a record-breaking weakening cycle for the Cedi, leading analysts to predict further challenges for the currency due to increased risks associated with election-year financing and stalled debt deals.

However, Fitch forecasts that the Cedi will end 2024 at GH¢12.25 to a dollar.