The Minority in Parliament has described as unsustainable, recent measures adopted by government to tackle the fall of the cedi against major trading currencies especially the US dollar.
According to the Deputy Minority Leader, James Klutse Avedzi, the injection of some $800 million of reserves from the Central Bank into the economy to stabilize the currency won’t work beyond a couple of weeks.
The cedi has depreciated against the dollar from GHc 4.9 to over GHc 5 in the last two months to the dismay of the business community, among others.
President Nana Akufo-Addo has said the government is doing all it can to halt the fall of the cedi, which has left him “extremely upset and anxious”.
The cedi has depreciated consistently against the dollar in the past months, bringing up a lot of concerns from the business community.
Speaking to Citi News, the Ketu North MP said the government must deploy long-term measures to strengthen the local currency.
He said of the injection of the $800 million, “that is good [but] what will happen is that when that money gets into the system, it will hold the rate of depreciation a bit… probably for a week or two.”
“Once the businesses go to syphon that money from the system; because they need it to do their imports, we will come back to square one,” he said.
Some observers have suggested that such funds be used to buttress the agriculture and manufacturing sectors of the economy.
The Chief Executive Officer (CEO) of Dalex Finance, Ken Thompson has argued that emphasis must be placed on Ghana’s productive sectors to help halt the depreciation of the cedi.
Mr. Thompson said if even 30 percent of the money used in attempts to stabilise the cedi had been pumped into agriculture, “by now we would have been self-sufficient in at least rice.”
“All I know is that we import everything and export very little. Over 75 percent of the containers that come into this country go back empty. That is what we should be talking about.”
Addressing forex market
In response to the recent concerns of the strength of the cedi, the Bank of Ghana turned its attention to the forex market.
It issued directives on how participants in the forex market must conduct their businesses to stabilise the cedi and improve information flow.
The directives were categorized under areas such as ethics, fairness and integrity; general dealings principles and market conduct, as well as risk management compliance among others.
Implementation of the new directives begun on February 25, 2019.