Experts have attributed different reasons to the perennial free fall of the Cedi against its major trading partners, especially the US dollar in recent times.
While many economists and financial analysts are of the opinion that, the cedi’s depreciation is as a result of imports and export imbalances, the Vice President Dr. Mahamudu Bawumia is of a different view.
During an economic forum last week at the premises of TV3, former president of the Association of Ghana Industries, Tony Oteng – Gyasi blamed the country for being import – driven economy, and called on government to implement policies to save the economy from the influx of foreign goods.
Bemoaning the country’s unbridled import situation, Chief Executive Officer (CEO) of insurance firm, Dalex Finance, Mr. Ken Thompson, said“…we are importing everything and producing virtually nothing. This is the same country that took cocoa, which is not indigenous to Ghana, developed it, and at a point, became the number one exporter in the world, so don’t tell me Ghanaians do not respond to economic incentives…”
For him, the best way forward is for the country to turn its attention to the agriculture sector. Urging government to prioritise and make the secotor attractive, adding, “agriculture is the silver bullet. Make agriculture “sexy”.
By so doing, he proposed that, government should provide the rural areas with wifi, roads, health facilities, potable water, good schools, extension services and all the things that will make life comfortable for those who choose to live there (rural agric producing areas), otherwise we will end up nowhere.
But in sharp contrast, the head of Ghana’s Economic Management Team (EMT), Dr. Bawumia, has pointed accusing fingers at the International Monetary Fund’s (IMF) policy directions as the cause of the currency depreciation.
Speaking at the first town hall meeting by the EMT on Wednesday, April 3, 2019, the economist and former deputy governor of the Bank of Ghana (BoG) said, the seven action plans that were given to the country to complete to end the IMF exit program before the end of last month, led to an all time record breaking rate of GH¢5.86 to $1.
According to him, “The most important and the proximate cause of the recent depreciation is the time inconsistency of an IMF prior action on the reserves target.” “One of the conditions that the Bank of Ghana had to meet was to increase its net international reserves to the level of December 2018″.
He therefore said, the “demands for foreign currency was not met by supply as normally happens on a day-to-day basis, and we know when the demand is greater than the supply or the supply is not coming, the price will go up and this is exactly what was happening.”
He also denied the assertion that the Bank of Ghana was pumping of $800 million by to stabilise the cedi, explaining that, “the market corrected itself. Investor sentiments acknowledged that the fundamentals are much stronger than expected.”
The Vice president quickly added that, the cedi has since recorded some marginal appreciation closing at around GH¢5.56 against the dollar as of March 15, 2019.