The Ghana cedi which made some enviable gains against some major international currencies in December last year has come under critical scrutiny following some economic decisions made by the country’s economic management team.
An economist and lecturer at the Wisconsin International University College predicted that the Ghana Cedi will lose value by depreciating further to GHC15.00 to 16.00 per dollar by end of February this year.
Dr. Worlanyo Samuel Mensah in an interview with Trust 98.3 FM in Asesewa, stressed that the Bank of Ghana withdrawal of support for government dollar reserve on importation of rice, oil, tomato paste, toothpick, millet, poultry and others would put pressure on the fewer goods due to high demand which in turn will increase the request for dollar.
As more people were expected to come home or go out (foreign travel) for the Christmas festivity, Dr. Worlanyo Mensah asserted such a move would give rise to high demand for international currencies, especially the dollar.
According to him, “the high demand for the dollar will push the cedi to devalue more against the dollar.”
Suggesting contrary to the restriction of forex exchange on some import commodities, the financial investment consultant Dr. Mensah Samuel noted that government should have supported local capacities and producers, where local producers will be in a position to produce more substitutes for competitive products in the market.
He maintained that the cedi will not only depreciate but also with high inflation in the first quarter of 2023.
In a related development, the Governor of the Bank of Ghana, Dr. Ernest Addison, at a Public Accounts Committee meeting on Tuesday indicated that the pressure on the Ghanaian economy is the reason behind the depreciation of the cedi.
Meanwhile, a news report cited on www.myjoyonline.com said the Ghana cedi has depreciated by about 12.7% to the US dollar in the first seventeen days of the year.
The report went ahead to state that the current status of the local currency makes it the second weakest currency after the Egyptian pound among 15 currencies in Sub-Saharan Africa.
The Ghanaian economy is currently battling with high domestic and foreign debt, debt restructuring issues including ‘hair cut’, securing approval for an International Monetary Fund (IMF) bailout and continuous rise in inflation in food, utility, transport, and housing among others.
Figures from the Ghana Statistical Services (GSS) for December last year among five human basic needs recorded inflation rates higher than the national average of 54.1%.
Among them were Housing, Water, Electricity, Gas and Other Fuels (82.34%); Furnishings, Household Equipment (71.52%); Transport (71.42%); Personal Care, Social Protection and Miscellaneous Goods and Services (60.94%) and Food and Non-Alcoholic Beverages (59.71%).
Notwithstanding these variables, the Vice President who doubles as the head of the country’s economic management team, Dr. Mahamudu Bawunia is confident the gold for oil policy will limit the pressure on forex. He gave the assurance after the government announced receipt of 40,000 metric tones of the first consignment of the oil for gold deal on Monday.
In same regard, the Governor of the Bank of Ghana (BoG) Dr. Ernest Addison allays fears that the poor performance of the cedi in 2022 will not be witnessed again.
Dr. Addison emphasized that the government announcement of a debt standstill policy, where the money used to service foreign debt will not go out anymore is among the reasons that will take pressure on the forex market.
The BoG chief was quick to put a caveat that “I can stick my neck out that the cedi will not see the sort of things we saw in 2022 if everything works well.”
But blaming the poor performance of the cedi on an absence of a strategic blueprint, Dr. Worlanyo Mensah Samuel stated programs formulated by successive governments are mostly about policies that popularize power holders and win them elections.
“…their mindset is on political programs which most at times doesn’t favor the poor.” The flagship programs are all political programs that will popularize you to win election,” Dr. Mensah said.
To transform the economy and also bring prices of goods and services moderately affordable for the ordinary Ghanaian, the Reverend Minister and Financial Investor Dr. Worlanyo highlighted that government should resource local entrepreneurs and district best farmers to be able to produce in high commercial quantities. In effect, he believes it would help to achieve food and water security and also stabilize the economy.