| Foreign Exchange Management |
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Foreign Exchange ManagementGlobal Fund projects are performance-based against the currency in which they are issued—usually U.S. dollars. Because the Global Fund does not allow in its grants for currency variations, in the exchange of U.S. dollars to or from Nigerian naira a potential exists that exchange rate fluctuation can risk the performance of the project through the loss of available program funds. This can be particularly of concern given the time lapse between when program budget submissions are made for Global Fund approval and when funds are dispersed. The Global Fund does not issue guidelines for how this issue might be approached, and thus, the possible approaches discussed below need to be considered by PRs against their individual situations.One approach is for PRs (and SRs) to open a foreign exchange (FOREX) bank account into which Global Fund monies budgeted for international procurement are deposited, and from which payments to international suppliers are subsequently made. Public PRs are, however, generally unable to operate FOREX bank accounts. Nonetheless, this is a suitable option for non-governmental PRs.A further approach is contracting with competent external procurement agents to conduct international procurement and requesting for Global Fund to transfer funds directly to the external procurement agent in foreign currency. Potential loss on exchange rate variation may thereby be minimised. PRs should keep the CCM aware of the impact that exchange variation has on program performance. In some countries, Ministries of Finance have been prepared to absorb exchange losses on the Global Fund programs. |
