By Kemo Cham
The Bank of Sierra Leone (BSL) has announced a series of directives aimed at protecting the Leone as the legal tender.
The Central Bank outlawed quotation of prices and making of payment in any foreign currency in the country and prohibited the possession or export of foreign currency in excess of US$10, 000 or its equivalent outside the banking system. The third directive prohibits the practice of offshore trading in foreign currency by Non-Governmental Organisations (NGOs) and their donors.
Central Bank Governor Prof. Kaifala Kallon said the move is geared towards protecting the Leone against foreign currencies, particularly the US Dollar. He said all of these practices have contributed to the shortage of the dollar which has occasioned an going economic crisis that has led to high inflation which has shut up prices of goods and services.
Figures from the BSL this week showed that the US Dollar goes for Le9,123. In the black market the exchange rate is higher.
Prof. Kallon told journalists on Tuesday that the new directives were taken in line with provisions in the 2019 Bank of Sierra Leone Act, as amended. He said they were in no way a reaction to the current situation, rather they were part of reforms he had put in motion when he assumed office. The Bank Governor said he couldn’t implement these measures earlier because he needed the legal basis for them.
“When I was appointed, I realised that there were a lot of anomalies in the economy. But we did not have the legal authority to correct them,” he stated. He cited the issue of black market trading in foreign currency and landlords requesting for payment of rents in foreign currency, all of which he said were illegal.
“There was nothing in the law that would allow us to deal with that,” he said.
The 2019 Bank of Sierra Leone Act, among other things, empowers the Bank to temporary restrict the purchase, sale holding or transfer of foreign exchange. It is on this bass that the Bank has imposed the US$10, 000 limit, prohibiting individuals, business entities and any organisation from holding the proscribed amount or its equivalent in any other foreign currency outside the banking system. Anyone traveling into or out of the country will be required to declare all foreign currencies in excess of the proscribed amount, Kallon said.
Foreign exchange bureaus are required to make daily deposit of all foreign currencies into a commercial bank by 1mp and to submit reports of details of their foreign currency transactions on a daily basis, he added.
The Governor said NGOs and their donors are also required to discontinue a practice of offshore trading of foreign currencies. This means that all remittances to NGOs should be channelled directly through their accounts held in banks operating in the country.
The BSL said penalties for violations of these directives range from jail terms to fines and withdrawal of operating licences.
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