Finance minister Seth Tekper has attributed the continuous depreciation of the cedi to speculative activities of some Banks, financial Institutions as well as foreign exchange bureaus in the country that are allowed to retain foreign exchange
Ghana’s growing and insatiable appetite for the consumption of imported goods has also been blamed by the minister for the cedi’s woes.
The cedi this year alone has depreciated by more than 27 percent.
Presenting his midyear review of the 2014 budget, Seth Tekper said the loss of foreign exchange from the rapid fall in world commodity prices, especially gold and cocoa in the 2013 fiscal year as well as loss of foreign exchange from the sharp decline in grants from Ghana’s development partners from 2012 to date, are also the cause of the cedi’s poor performance.
According to Seth Tekper though the continuous depreciation of the cedi could be positive for exporters, ‘its impact has to some extent affected fixed income earners, inflation, interest rates and economic activities’.
Government according to the finance minister will continue to design and implement appropriate measures to save the cedi from further fall.
Among the measures will be the continuous review and clarification of the Bank of Ghana’s foreign exchange measures to stop its unintended consequences, especially those that affect business confidence.
There will also be the introduction of more measures which are intended to boost the flow of foreign exchange into the economy.
An increase in the production of crude oil and gas to reduce the reliance on imported light crude oil for the generation of power is also expected to reduce demand for forex.
Seth Tekper believes the measures coupled with expected reversals in the low world commodity price of cocoa would improve the foreign exchange position of Government.
But the measures will not end there, enforcement of the President‘s directive for all MDAs and MMDAs to patronize made-in-Ghana products to preserve foreign exchange, addressing the annual seasonality of foreign exchange inflows by effectively arranging the smooth use of international reserves through interventions including swaps, especially for the period after the cocoa season among others will all be enforced to keep the cedi afloat. ‘continuing with on-going discussions with the business community that is allowed to retain significant foreign exchange to channel those funds through the Bank of Ghana and domestic banks, enforcing Government‘s directive for MDAs and MMDAs to award contracts only in Ghana Cedis, checking the illegal practice of dealing in forex transactions on a large and often speculative scale without licence and implementing the directive of Cabinet to review the laws and generous incentive packages to make retentions commensurate with the risk associated with doing business’.
By: Vivian Kai Mensah/citifmonline.com/Ghana