The recent injection of close to a billion dollars into the economy by the central bank to stabilise the failing Ghana cedi is the “most useless” and “disgraceful” use of Ghana’s hard-earned foreign exchange, economist Kwame Pianim has said.
At an economic forum held in Accra on the theme: ‘The Ghana cedi, breaking the cycle of depreciation’, Mr Pianim said such use of Ghana’s forex was pointless.
The central bank recently pumped some$800 million into the system after the cedi fell close to the $1: GHS6 rate.
Coupled with the recent issuance of a $3 billion Eurobond which was oversubscribed by six times, the cedi regained some value and traded at $1: GHS5.16 but recently fell to $1: GHS5.41.
In Mr Pianim’s view, “In 1988, we brought the two – the black market rate and the official rate together – that’s when we set up the forex bureaus to try to mobilise the dollars in the private sector and put it in the main sector.
“Now, we have a market-determined one, and the central bank sometimes has moved in with $700 million to stabilise the cedi. It is the most useless and disgraceful use of our hard-earned foreign exchange that should be used for transforming the economy.
“Instead of using that [for that purpose], you can use it for processing tomatoes so that we don’t import, for rice so that we don’t import”, he said, adding: “For a steady long-term approach, as I’ve said, we need to move to restructure the economy”.
He also said Ghanaians should learn to blame the independent Bank of Ghana for the weakness of the cedi rather than the government. “We should not blame the government for the cedi depreciation,” he said, adding: “We should blame the Governor of the Bank of Ghana because that is their job.”
Source: classfmonline.com
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Mr. Mpianim, you are Right,but the would have ideal if other things had been equal economically. The Problem of the Ghana economy had been structural. And it will take time to transform it to a prodction-based economy. Of Course, the strength of any currency is backed by the level of her ability to produce goods and Services. To be able to achieve that goal you need the political will and space. I think you can agree that the present Administration had so far demonstrated her political will in most of her Policy lines in terms of her flafship Programms: FHS, planting for Food and 1D1F etc. The four year term of Office is too short to enable you build a functional industrial-based economy to be accorded that political space by the ectorates.
MR PIANIM, I HAVE ONCE RESPECTED YOU FOR TELLING THE NPP THE TRUTH. THEY BORROW DOLLARS TO CUSHION THE CEDI. IN FACT THIS IS A LAZY MANS APPROACH. THEY SAID THEY WERE MOVING FROM TAXATION TO PRODUCTION BUT NOT A SINGLE HENS COOP IS BUILT. THEY THINK IT WAS EASY TO RULE, MAN IT IS NOT MOUTH TALKING BAWUMYA. THE BIBLE SAYS IF YOU REPENT AND CONFESS YOUR SINS GOD WILL FORGIVE YOU, JUST LIKE KUFOUR DID. IF THE NPP CONFESS THEIR SINS GHANAINS WILL FORGIVE THEM OR ELSE, 202 WE GO SHOW NANA
Its good you suggest building/revamping a forex generating solution but that solution will not be implemented by the BoG or its governor. It has to be implemented by government possibly/hopefully in collaboration with the private sector. So then it comes back to government and the presidency.
Sir, we have a situation where we as a country have not identified our strenght to take advantage of. Our success and back bone shd be agric, but how many banks are ready to help the youth into agriculture?
Have you produced a business plan for any of the projects you are talking about? Or you are just one of the SSS Economists just voicing these recommendations out after waking up from some dream?
My comment was not tn relation to any purported recent market intervention by Bank of Ghana. I was referring to past practices to halt the depreciation of the cedi that did not not work. I am not aware of any recent injection of "one billion dollars" into the market that the article alleges. My point about "blaming the Governor was to take the partisan political point scoring elements from the discussion of the exchange rate. Kwame Pianim
Who appoints the Bank of Ghana Governor?