‘Don’t blame private sector for depreciating cedi’

The Executive Director of the Centre for Freedom and Accuracy (CFA), Mr Andrew Awuni, has said the attacks on the private sector as the cause of the depreciating cedi will kill investor confidence in the Ghanaian economy.

“The foreign exchange crisis that the country is going through is a matter of demand and supply. A true and proper solution will be to increase supply or reduce demand. But the focus should be on the governmental level and not to go on a blistering attack on the private sector and individuals as we are seeing now.”

Addressing the media at a forum on Monday, in Accra, Mr Awuni said any attempt by the government to address the cedi depreciation saga without taking into account the question of how to increase supply or reduce demand would be a sheer waste of time.

“That is why the recent announcement by BoG of the injection of some US$20 million in the economy to stabilise the cedi is laughable,” he said.

However, Mr Awuni said although the central bank could come in with short-term measures to address the situation, the BoG should not be held responsible for the depreciating cedi.

“Indeed the attempt to make the BoG a scapegoat for a crisis that is purely the result of the lack of imagination, incompetence and the indiscretions of the economic and fiscal policy managers is very unfair,” he said.

The cedi problem

According to Mr Awuni, the supply or volume of foreign currency in an economy was the function of the government’s financial and economic policy management and not just monetary policy.

“When government fails to initiate policies that improve on productivity and increase economic activity, people resort to imports to make up for the short supply of their needs, and this puts pressure on the dollar as the demand for the dollar to pay for imports increases, hence increasing the value of the dollar against the local currency,” Mr Awuni said.

Mr Awuni added that even though Ghana agreed that over-spending had resulted in the current economic hardship, “no one has taken responsibility for this horrendous and debilitating action or punished for putting the nation through it all”.

“And so the year 2014 opened with the US dollar going for GH¢2.20. In less than two months, the US dollar is now selling for GH¢2.87 and even that the dollars are nowhere to be found,” he added.

Consequence and solution to the depreciating cedi

“The solution is not in legislation, controls or commands. What we have on our hands is market problem and only market solutions should apply. Let’s not give anybody the impression that we are creating another Pyongyang here in Ghana with the controls that are being introduced,” he added.