Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye has said a holistic strategy is needed immediately to rescue the local currency.
He asked the Minister of Finance Ken Ofori-Atta and the Governor of the Bank of Ghana (BoG) Dr Ernest Addison to immediately draft that strategy.
In a tweet, Dr Kwakye said “A comprehensive strategy is required to save the cedi. The Minister and Governor should return quickly from Washington to put in place such a strategy.”
The Minority Spokesperson on Finance, Dr Casiel Ato Forson has projected the local currency, the Cedi to hit 13.5 to a dollar by end of the year.
In his view, the woes of the Cedi are due to the lack of investor confidence in the local economy.
Foreign businesses, he said, are repatriating their projects bac to their home courtiers in Dollars, a situation that puts stress on the Cedi.
The Cedi is currently selling sold at ¢11.62 pesewas in some forex buraus.
Speaking in an interview with TV3’s Paa Kwesi Asare on the sidelines of the ongoing World Bank/International Monetary Fund (IMF) Meetings in Washington D.C., Dr Ato Forson who was at the event in his capacity as the Minority Spokesperson on Finance said “[Ghana] is in serious troubles. If you look carefully, we have a country that its inflation is inching towards 40 per cent, the currency is depreciating by almost 50 per cent. The Cedi today is trading at 11.6 to a dollar.
“If care is not taken by the end of the month it is going to hot 12 Cedis per Dollar. I am projecting that the Cedi will end the year by 13.5 to one Dollar. This is where we are going to get to.”
The Former Deputy Finance Minister added “Investors have lost confidence in the Ghanaian economy, as a result they fly to safety. People are moving and repatriating their money. People that are repatriating their money obviously think that currently, inflation is inching to 40 per cent, but they get 20 to 25 percent interest rate so there is real negative interest rate and as a result they will prefer to change currency to USD.”
The BoG recently identified five key reasons for the woes of the local currency.
These are “The strength of the US dollar, Investor reaction to Credit Rating Downgrade, Non-Roll over of Maturing Bonds, The sharp rise in crude oil prices and impact on the Oil Bill, Loss of External Financing.”
The measures introduced to resolve these, according to the BoG, are the “Gold Purchase Program to increase foreign exchange reserves; Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with the importation of petroleum products; Bank of Ghana is entering into a cooperation agreement with the mining companies to provide BOG with the opportunity to buy gold as when it becomes available.
“The Bank of Ghana is supporting the banking sector with foreign currency liquidity to help meet the demand for external payments. The recently approved USD750,000,000 Afrexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.”
The recently signed 1.13billion dollar Cocoa Syndicated loan was also a measure to shore up the Cedi, the BoG.