The government’s fiscal and monetary policies have come under attack as stakeholders, businesses and currency analysts question their potency to revive the ailing economy and stabilise the fast depreciating cedi against the major foreign currencies.
The President of the Ghana Union of Traders Association (GUTA), Mr Goerge Ofori; Executive Secretary of the Association of Ghana Industries (AGI), Mr Seth Twum Akwaboah, and a currency analyst, Mr Kofi Ampah said in separate interviews with the Daily Graphic in Accra, said they had lost confidence in the monetary policies in particular because at the interbank market, the cedi was weakening by the day.
Checks at the interbank level indicated that $1 is being exchanged for GH¢4.25 while at the forex bureaux $1 is being quoted for between Ghc4.30 and Ghc4.31. At the black market level, $1 is going for between GH¢4.35 and GH¢4.38.
The Monetary Policy Committee had confirmed in its report that the developments in the foreign exchange market indicated a further weakening of the domestic currency in 2015.
From January to May 8, 2015, the cedi cumulatively depreciated by 17.2 per cent against the dollar, compared to 21.3 per cent recorded in the same period in 2014 but the stakeholders are wondering why at a time when the currency was expected to stabilise, it was still falling; an indication that there was a lot wrong with monetary and fiscal policies.
According to them, in spite of the numerous promises made and the myriad of assurances over the last couple of years, things continued to go bad while nothing seemed to be working with the value of the cedi falling at an alarming rate.
Consequently, the stakeholders called for pragmatic action that would help turn the dwindling fortunes of the economy around.
AGI’s concerns Mr Akwaboah, said the daily depreciation of the cedi was making it difficult for businesses to forecast and plan. “We have monitored the events surrounding the cedi over time and noticed that the fall of the cedi is seasonal because within the first quarter we know it to fall and stabilise by the second quarter”, he said, but noted that “unfortunately, this time round, the situation is different because at this time when we expect some relative stability, things are rather worsening by the day”.
Mr Akwaboah said the AGI had held a couple of meetings with the Ministry of Finance and the Bank of Ghana and was assured that there were expectations of some inflows within the next couple of weeks which would amount to $600 million and it was expected to stabilise the local currency.
But the AGI Executive Secretary is of the view that considering the huge demand for dollars by the banks, the amount would do very little or nothing to shore up the local currency.
He said the business community and the people in general had lost confidence in local currency and were hoarding the dollar, thus putting pressure on the cedi.
He said the AGI was planning to provide platforms to engage the public and the policymakers in an attempt to help restore confidence in the cedi.
GUTA discouraged The Ghana Union of Traders Association, members do not know what to believe as all the statements meant to correct the situation were rather making matters worse.
The President of the association, Mr Ofori, said the association’s members who borrowed from foreigners to do business were losing out because at the time of repayment, the depreciating cedi compelled them to add their capital to defray their debt.
“We are seriously losing out and the rate at which this is happening is most unfortunate and alarming”, he said. He said the members of the association could meet shortly to take a strong line of action to put the policymakers on their toes to come up with more pragmatic solutions to end the free fall of the local currency.
“The economy is being choked with triplets; the depreciating cedi, unending energy crisis and inflation, and I wonder what they can tell us again. They said they would solve these but what do we see? So now you can understand why we have lost confidence in the monetary and fiscal policies of the government”, Mr Ofori said.
Currency analyst shares thought A currency analyst, Mr Ampah, blamed the Bank of Ghana for not monitoring the commercial banks enough do what would help its policies to become more effective.
In attributing some reasons for the falling cedi, he said the country lacked adequate data on exports and noted that “we see a lot of exports but the exports are mainly done by foreign companies working here and therefore, when they export, they keep the profits in their country although they change a lot of cedis into dollars here”.
He said the over reliance on donor inflows to strengthen the local currency must cease because any freeze or delays brought about challenges.
Mr Ampah said also that the country was over relying on commodities such as gold and cocoa whose prices were not stable on the international market, and noted that “anytime the prices plummet, we are found wanting”.
To him, these developments have been with the country for many decades and wondered why the managers of the economy were not thinking outside the box to find alternatives.
“We need to reduce our deficits because a twin deficit is not helpful to any economy; we also need to work to bring down inflation and that is where we will begin to see some positives”, he said.
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