Vice President Dr. Mahamudu Bawumia has often been criticized following the continuous depreciation of the cedi against the US dollar.
This has led to the country’s economy coming under scrutiny, with the business community airing out their frustrations.
Since the turn of the year (2019), the local currency has depreciated from GHc 4.9 to over GHc 5.5 per US dollar.
Earlier on Tuesday, March 19, 2019 though, the cedi appreciated a bit and is now selling at around GHc 5.4 to the US dollar.
Dr. Bawumia, as head of Ghana's economic management team, is set to answer questions relating to the state of the country’s economy at a town hall meeting slated for April 3.
Ahead of the programme, the Minority in Parliament has served him five questions that he needs to answer.
The questions were posed Wednesday, March 20, 2019 by the Minority Spokesperson on Finance Cassiel Ato Forson
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Below are the five questions:
Question 1: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate against its own research findings that US policy normalization is strengthening the US dollar and causing investors to move funds away from emerging economies and that upward adjustments in domestic prices of petroleum products are likely to affect transport and utility prices?
Question 2: Why would an independent central bank, with a focus on price stability, decide to lower the policy rate in the face of dwindling net international reserves and a rising interest rate abroad?
Question 3: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate in favour of growth, which has been projected to be higher than the previous year’s, while the local currency is under pressure?
Question 4: Why would an independent central bank with a focus on price stability decide to lower the policy rate in the face of excess liquidity in the banking sector emanating from banks increasing their minimum capital by over 100 percent, while the local currency is fast depreciating?
Question 5: Clearly, an economy cannot be externally unstable and internally stable. How can a rapid exchange rate depreciation be accompanied with a single digit inflation rate as captured by the posted macroeconomic indicators?
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Source: Yen News