Ghana’s economy, continues to face a lot of challenges even after 56 years of independence.
This economic predicament encompasses all the economic sectors in the country.
Recently, concerns have been raised about the quality of economic growth, particularly in terms of unemployment, the Cedi depreciation, high cost of living, as well as energy crisis of which petroleum is of no exception.
The Ghanaian Cedi in the past few monthsm has gone a high appreciable fall in value against other major international currencies on the foreign exchange market with the US Dollar in perspective. It is truth that the financial turbulence in the world is having knock on effects on major economies but the rate at which the Cedi is depreciating against the Dollar is quite disturbing.
Now, one Dollar is equivalent to almost five Cedis which is very alarming to the country’s economic growth. When this happens, it affects the prices of goods and commodities.
It is a fact that petroleum is a major contributing factor to every economy. It is used in critical activities such as fuelling the transportation sector and running most important industries.
However, a rise in the price of petroleum oil poses serious threat to the economy. Currently the price per a barrel of petroleum is almost seventy dollars as against fifty-two dollars in 2017.
The boom in American oil production and the crash in the prices of oil have also help to boost the dollar value.
This increment per a barrel of petroleum means Ghana has to convert more Cedis into dollars to make a purchase since petroleum oil is sold in dollars. Nonetheless, it is very surprising to see a country like Ghana faced with high cost of petroleum whiles such a product is being extract in the country.
An increment in petroleum oil has direct connotation on the prices of goods and services. It is seen that as the price of oil moves up or down, prices of goods and services follows in the same direction.
The fuel price hike in Ghana has impact on the general cost of production at all levels.
This has forced the cost of living to go up in the country and it has now become a major political issue because the ruling party is being blamed for the present hardships.
Generally, the cost of foodstuffs shot up because the rising prices in petroleum forces
transporters to charge hare fares for carting food products from the hinterlands to the cities. As a result of this, the additional cost incurred by the producers is passed onto consumers.
Moreover, industries lay off workers since demand tends to fall and that affects profitability all because of the rise in petroleum oil. This cause great damage to the economy since taxes of such workers paid to the state is also cut off.
In conclusion, a country’s currency is, in part a reflection of how well or poorly its economy is doing.
For the moment the US Dollar, is setting the pace for the rest of the world.
When the Ghanaian Cedi depreciates relative to other currencies, the Cedi prices for foreign goods increase relative to domestically produce goods, making import more expensive.
A case in point, is the rising cost of petroleum products that are imported to the country which eventually reflects in fuel price hikes. This leads to the rise in prices of goods and services which results in high cost of living and poor economic growth.
By SANDRA NANA AMA DAMPTEY