Economist Dr Ebo Turskson has downplayed the effects, an initial tranche of one hundred and fourteen million dollars from the International Monetary Fund (IMF), meant to be used to shore up Bank of Ghana’s declining reserves will have on the cedi.
[contextly_sidebar id=”axPHgH0oX2bmR9VAdFH3jiHmU8eAUdag”]He contends the move would not automatically lead to the rescue of the cedi which in recent weeks, has significantly declined against the dollar.
“Part of the reason why we have gone to the IMF is to stabilize our foreign currency and this is the time that our cedi has started depreciating like it did last year around the same period so we are saying that the IMF has approved this at this time but this is not going to be the solution to our cedi depreciation problem because these are short time measures.” He told Citi Busines News.
The executive board of the IMF on Friday April 3, 2015, approved a three-year arrangement under the Extended Credit Facility (ECF) for Ghana in support of the country’s medium-term economic reform programme.
The executive board’s decision is to enable an immediate disbursement of about one hundred and fourteen million and eight hundred thousand dollars to Ghana.
But speaking to Citi Business News, an economist and senior lecturer at the University of Ghana Dr. Ebo Turckson said shoring up BOG’s reserves cannot save the cedi from further depreciation.
He said government must rather come up with medium to long term measures like cutting imports to stop the cedi from further decline.
“If we want to stabilize our currency over the medium term then we should put in place polices that will diversify our exports, move into export sectors that are high valued addition sectors, so that we can export and get enough foreign exchange. Even if our imports are necessary we should have enough reserves to take care of those imports by increasing significantly our exports.”
The IMF program aims to restore debt sustainability and macroeconomic stability to foster a return to high growth and job creation, while protecting social spending.
Ghana ailing economy pushed it to sought assistance from the IMF last year.
The Ghanaian economy has been faced with some critical ailing conditions for some time now amidst rising inflation, a depreciating currency, high budget deficit amongst others.
According to President Mahama the decision to open discussions with the International Monetary Fund was not because of the failure of government’s own home grown solutions, but rather because of the need for policy credibility and confidence from the international financial institutions, capital markets and investors for the measures being implemented to restore economic stability and growth.
“So we are going to discuss with the IMF how we can turn the deficit around quickly and create the kind of confidence even in the short-term narrative.”
By: Norvan Acquah-Hayford/citifmonline.com/Ghana