A Deputy Information Minister, Kojo Oppong Nkrumah, has been left in tears over the depreciation of the Ghanaian currency; the Cedi.
In his state of despair, he took on the Deputy Minority Leader, James Avedzi, saying his speculation about the depreciation of the Cedi against the dollar, only seeks to create panic.
James Avedzi, said he expected the Cedi’s recent depreciation to the dollar to continue into December, where the yuletide ushers in higher demand for the foreign currency due to high imports.
But speaking to Citi FM, Mr. Oppong Nkrumah, said all the deputy Minority Leader, was doing was “speculating to cause panic.”
“This is what he is doing. He has gone on the Floor [of Parliament], he has gone on radio speculating to cause panic. If that panic translates into the results, he will come and claim success,” Mr. Oppong Nkrumah added.
James Avedzi, cited weak reserves and earnings of reserves as the basis for his prediction.
But Mr Oppong Nkrumah, disputed this assertion saying, “in December 2016, Ghana had $4.8 billion in international reserves. That amounted to 2.5 months of import cover.”
A year later, the stock of reserves “had risen to $6.9 million,” the deputy Information Minister said.
“As I speak to you today, our stock of reserves is around $8 billion, which is equal to about four months of import cover… We had a balance of trade surplus and current account surplus. We exported more than we imported in dollar terms and that is how come we were able to shore up our currency.”
James Avedzi’s pessimist outlook on the Cedi is ultimately unhealthy to the economy, Mr Oppong Nkrumah remarked.
“I would suggest that we desist from this penchant to cause panic hoping that it will go along that way and then come back to say that ‘we said it.’ It doesn’t help our economy. It doesn’t help our nation in any way.”
The government has maintained that it has put in place robust measures to halt the free fall of the Cedi.
According to Dr. Gideon Boako, Spokesperson for the Vice President, Dr. Mahamudu Bawumia, efforts to reduce inflation and increase the availability of foreign reserves, point to a foreseeable halt in the depreciation of the cedi against major currencies like the dollar.
The depreciation of the Cedi was one of the significant issues the New Patriotic Party (NPP) criticized the Mahama government for, when they were in opposition.
At the time, Vice President, Dr. MahamaduBawumia, consistently taunted former President Mahama, for failing to halt the fast depreciation of the Cedi.
Mr Mahama, recently complained about the cedi to dollar exchange rate, which he said stood at GHc4.7 to $1.
He accompanied his words with a short video of Dr. Bawumia supposedly expressing misgivings about the NDC’s handling of the local currency, while they [NDC] were in power.
Dr. MahamuduBawumia, subsequently issued a scathing response, saying Mahama’s criticism only exposed his lack of understanding on issues bordering on crucial aspects of the economy.
“It has been brought to my attention that former President Mahama has recently been talking about exchange rate depreciation. The former President’s comments once again, sadly demonstrate his lack of understanding on key aspects of our economy,” said the Vice President.
In Dr. Bawumia’s view, NPP has demonstrated to be “by far, better managers of the Cedi” than the NDC.
“In the entire eight years of President Kufuor’s (NPP) rule from 2001 to 2008, the price of the Cedi relative to the dollar moved from GHc0.7 to GHc1.2, representing a depreciation of 72%. However, in the eight years rule of both Presidents Mills and Mahama (NDC) from 2009 to 2016, the Cedi depreciated by 247%, moving from GHc1.2 to GHc4.2. Such higher rate of depreciation in less than a decade is simply unacceptable and signifies high levels of incompetence,” Dr. Bawumia said.
As at May 7, the cedi was trading at 4 cedis, 41 pesewas, but by June 7, it had depreciated by 0.7 percent to 4 cedis, 44 pesewas.
The central bank, has already assured that the changes in the exchange rate are temporary; hence the cedi will soon see some stability.
The Deputy Minority Leader, had predicted a further decline in the value of the Ghana cedi, following its recent free fall against the dollar saying the value of Ghana’s currency may stand at 5 cedis 20 pesewas to the dollar by December this year.
He attributes this to what he calls the poor management of the economy by the Akufo-Addo administration.
Mr Avedzi indicated that the rapid depreciation of the cedi had exposed the nation’s bad economic fundamentals under the current government.
“In December 2016, the exchange rate was GHC 3.86 to the dollar and as we speak now, the exchange rate is 4.85 to the dollar. The cedi has depreciated from January 2017 to date by over 26 percent. The fundamentals of the economy are still weak and that is why the cedi is still depreciating. We thought that they would have arrested the cedi and for that matter the value of the cedi will not fall. The cedi has depreciated over 26% simply because the whole of last year, the borrowing they did was done in foreign currency in the dollar terms.”
“…What they have to do is to go and borrow more, but that also tells you that the debt to GDP ratio will be changing so you will not have the fiscal space to borrow more and for that matter they will not be able to borrow to shore up the supply of the dollar so the pressure will continue to be on the cedi especially when it gets to November where demand will be higher for purchase of Christmas items. The pressure will be more on the cedi and the cedi will fall further.”