The Bank of Ghana (BoG) has been dragged to the Supreme Court over the depreciation of the cedi.
A private legal practitioner, Dr John Ephraim Baiden, is asking the court to order the bank to put in measures to provide a stable currency.
While accusing the BoG of overstepping its bounds and, as a result, hurting the cedi, the plaintiff noted in his statement of case that the court should ensure that Ghanaians regained their “monetary sovereignty”.
According to the plaintiff, the BoG was enjoined by the 1992 Constitution and the Bank of Ghana Act to maintain a stable currency for the benefit of Ghanaians and businesses.
The plaintiff, who brought the action in his capacity as a Ghanaian who has lost wealth through foreign exchange rate losses, is pleading with the court to direct the BoG to provide a stable currency.
Dr Baiden is urging the Supreme Court to issue an order of mandamus on the BoG or its governor and the board of directors to provide a stable currency and a change from a floating exchange regime to a fixed regime or a reasonable adjustable peg regime.
He is further urging the court to order the BoG to abrogate the present dual exchange rate or multiple exchange rate system to a single exchange rate system.
The court is also to decide on Dr Baiden’s call for an order directed at the BoG to provide Ghana with a 1:1 or nearer relationship with the leading global reserve currency, as occurred in 2007.
Among the reliefs being sought by the applicant, who joined the Attorney-General to the suit, is an order for perpetual injunction directing the BoG to refrain from deferring to a floating exchange rate regime in the conduct of its monetary policy.
He is also seeking a declaration that upon a true and proper interpretation of Article 183 (2) (a) of the 1992 Constitution of Ghana and the Bank of Ghana Act, 2002, Section 4 (b), BoG has neither promoted nor maintained a stable currency for the Republic of Ghana.
Article 183 (2) (a) of the 1992 Constitution provides, “The Bank of Ghana shall promote and maintain the stability of the currency of Ghana and direct and regulate the currency system in the interest of the economic progress of Ghana.”
Dr Baiden, who is also praying the court to grant other orders it may deem appropriate, holds the view that the BoG knew it lacked the requisite reserves or exchange rate stabilization fund to effectively intervene to give the cedi a stable value on the currency market.
Public Interest Action
Justifying his suit in a statement of case, he said he brought the action in the interest of the public, pursuant to articles 2 and 130 of the 1992 Constitution of Ghana.
“In 2013, the local currency suffered 17 per cent depreciation. The year-on-year depreciation shows a 21.96 per cent depreciation of the cedi against the dollar; 28.88 per cent against the pound sterling; 23.98 per cent against the Euro and 25.54 per cent against the Swiss Franc,” it said.
While imploring the court to direct the BoG to operate a fixed exchange rate regime, which he said was being practised by more than 60 countries, the plaintiff said East Timor, Ecuador, El-Salvador, Panama, British Virgin Islands, the Caribbean Netherlands, Palau, among other nations, had adopted the US dollar as their local currency.
That regime, he explained, would provide a greater amount of certainty for importers and exporters and thereby maintain a stable currency within and outside Ghana for the economic progress of the country.
Stop Bank of Ghana
Dr Baiden argued that unless the court stopped it, the BoG would continue “to utilise its unworkable monetary measures”.
According to him, the BoG was clearly out of its mandate and must, therefore, be whipped back in line.
Counsel for the BoG, Mr Samuel Codjoe, intends to raise a preliminary objection when hearing commences.
A motion on notice for preliminary objection is arguing that the action had been wrongly commenced at the Supreme Court on the grounds that “the complaint of plaintiff is basically to the effect that second defendant has caused a depreciation in the value of the Ghanaian currency but deliberately couched as an application for interpretation of the Constitution in order to bring the action within the ambit of articles 2 (1) and 130 of the Constitution”.
“That the Supreme Court, in the exercise of its original jurisdiction, is not the proper forum for the interpretation of an Act of Parliament and it is, therefore, wrongful for plaintiff to have invoked articles 2 (1) and 130 to seek interpretation of Section 4 (b) of the Bank of Ghana Act, Act 612 in the Supreme Court,” the motion on notice for preliminary objection concluded.
However, Dr Baiden argued that he had brought the action within the proper ambit of the law.
The court has fixed July 22, 2014 for hearing of the case.