‘Economic challenges concern for all’
Discussants at a forum on the cedi have underscored the need for the government and other stakeholders to work together to resolve the challenges confronting the economy.
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They were of the view that resolving the challenges of the national economy, particularly the fall of the cedi, was not for only the government but also for the people who should patronise made-in-Ghana goods.
They expressed this view at a forum organised by the Institute of Economic Affairs in Accra last Wednesday.
The discussants included Mr Fiifi Kwettey, the Minister of State for Economic Planning and Financial Services; Dr Anthony Akoto Osei, the Minority Spokesman on Finance in Parliament, and Ms Eva Lokko, an entrepreneur and the running mate of Dr Paa Kwesi Ndoum, the flag bearer of People’s Progressive Party (PPP) in the December 2012 general election.
The theme for the forum was, "The Cedi in Crisis: Implications and the Way Forward."
Disingenuous opposition
Mr Kwettey, in his presentation, showed how the cedi had depreciated over the years since 1999.
He attributed the depreciation of the cedi to structural economic imbalancese, such as the slump in the country's primary exports at certain periods and hikes in oil prices on the world market.
Measures in line
Mr Kwettey said no matter how strong the country's fiscal policies were, external challenges came in to add pressure.
The pressures, he said, resulted in panic among the public, because of "massive speculation."
It was to deal with that that the BOG announced its directives.
Mr Kwettey proposed a concerted effort by both the government and the people at resolving the challenge.
BOG tardy
Dr Osei, in his presentation, identified some causes of the challenge as the imbalance between the country's production and consumption, and other fundamental structural imbalances of the economy.
He said the country did not produce most of what it consumed; thus, it had to import to fill the gaps in consumption and the resultant pressure on foreign exchange was the cause of the depreciation of the cedi.
Dr Osei added that the Bank of Ghana (BOG) had been tardy in responding to some of the challenges that were long known.
Quoting from a Monetary Policy Committee (MPC) statement of November 27, 2013, he showed how the bank had predicted some external challenges which could affect the performance of the economy in 2014.
He, however, wondered why the BOG had waited until February 4, 2014, before taking action.
Way forward
Dr Osei proposed further engagements by the BOG with other stakeholders for more clarity on the guidelines, while commending them for reviewing the borrowing rate from 16 per cent to 18 per cent.
He said while ensuring compliance with directives, any measures that discouraged people from banking had to be discouraged.
He urged the Minister of Finance and Economic Planning, to get his team working to meet targets for the disbursement of funds said to be held up by donors.
Clarification not a review
The Head of Financial Stability Department of the BOG, Dr Benjamin Amoah, said additional notices issued by the BOG on February 14, 2014, were to clarify the policy directives and administrative measures of February 4, 2014, in addressing the depreciation of the cedi.
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The additional notices were not a review of the directives of the BOG issued to stakeholders, but were specified details applicable to identified sectors, he stressed.
IEA concedes
The Chairman of the IEA Board, Dr Charles Mensa, said the phenomenon of the cedi falling was first heard of in 1961, when laws were enacted to address the situation.
He conceded that a non-partisan approach would, therefore, have to be adopted to address the systemic challenge which had been experienced since 1961.