Deputy Finance Minister, Kwaku Kwarteng has dispelled speculations that the current depreciation of the cedi being witnessed against the dollar has reached an alarming stage.
Kweku Kwarteng argued that the current depreciation is normal and should not be a cause of concern to the public, particularly within the business community.
The cedi started the year at about 4.9 against $1 but has since dropped to about 5.4 to the dollar.
The deputy Minister, despite the sharp decline, insists it is not a strange decline suggesting that Ghana has over the years experienced such sharp declines particularly at the start of the year when foreign investors are repatriating their profits and capital.
In an interview with an Accra-based media house, Kweku Kwarteng remarked, “I disagree with you when you say the sharp drop in the cedi in recent weeks is new. It is not. We have seen this many times in the past where the cedi sharp drops and the Bank of Ghana steps in either by the administration of their reserves or different interventions, it stabilizes for a period we continue with the commentary and then the cedi drops gradually until we have the next sharp drop so this is not new. It is not strange at all it is not strange.”
Even though he was reluctant to admit assertions by the business community that the decline of the currency is a cause to worry about, the Deputy Finance Minister was quick to agree that it was an uncomfortable development.
He gave indication that the relevant institutions are taking the measures to address the situation but added that caution is being taken as such interventions must be well calculated to yield a desirable outcome.
“The short run drop of the cedi which makes all of us uncomfortable is something that the BoG owns. They will have to find strategies to deal with it. We have some reserves and the BoG of Ghana could have released reserves as a way of dealing with it but those are not decisions that you make because the cedi is falling. You need to understand why this is happening, you need to look into the future,” he pointed out.
The Deputy Finance Minister hinted that the decline could be attributed to the activities of foreign investors around this time of the year.
In this particular situation, he guessed that the country’s decision to end their relationship with the IMF and the flow of forex could be possible basis for the sharp decline.
“There is quite a heavy presence of foreign investors in our economy. When we go out and tell investors come to Ghana and invest, it is good when they come. They may invest in bonds and because the bonds are cedi denominated, they will have to change the money and that brings forex. They collect the money and do their investments. When you have this level of foreigners which you yourself have gone out there to ask for, what it also means is that at some point they will disinvest looking at what the future looks like and don’t forget we are exiting the IMF and they may all be suggestions to investors that let me go back a bit,” Kweku Kwarteng explained during the interview.
His position on the matter was, however, rubbished by Former Deputy inance Minister under the Mahama-administration, Fiifi Kwetey.
The Former Deputy Finance Minister questioned government’s rush to abolish taxes which controlled the importation of certain goods thus reducing the pressure on the cedi.
He also alleged that the politics around the management of the Cedi has also contributed to its decline citing the Vice President Bawumia’s haste to announce a slight improvement in the first three months of the government.
Fiifi Kwetey charged government to focus more on ensuring prudent economic management to avert the continuous decline of the currency as it is having a negative toll on businesses.
“If you recall less than three months into their coming into office in 2017, they declared triumphantly that they have been able to arrest the depreciation of the cedi, they have been able to padlock it. Now you are struggling to explain to the country how is it that the very same thing that you claimed you have achieved has now completely departed from you. In the midst of all you say you have achieved in economic management you simply are on able to provide the stability needed for the currency. This basically helps us all to know that often time the triumphant declaration is done too early, it is done in the name of politics. Whereas the real structure of the economy nothing at all has been down about it,” the Ketu South MP lamented.
Deputy Finance Minister reassured the business community that government is keeping an eye on the issue and will take stringent measures to curb the recurrent decline.
He mentioned, “The bank of Ghana will intervene in the way they see fit but on our side as government we are focusing on building our capacity to produce more and export more so we can substitute some pf those things we ate always in a hurry to import from outside whilst government also takes steps to ensure that we spend as little forex as possible.”
By: Jonah Eledi/awakenewsonline.com