Steve Hanke: Businesses Are Shutting Down Over Cedi Fall But Akufo-Addo Is Not Learning

Steve Hanke: Businesses Are Shutting Down Over Cedi Fall But Akufo-Addo Is Not Learning

  • Prof Hanke is repeating his call for Ghana to set a currency board to actively regulate the falling cedi
  • He tweeted on Tuesday that President Nana Akufo-Addo was not learning even as businesses were shutting down over high inflation and cedi depreciation
  • He said in many cases, a currency board had done a better job at holding a depreciating currency and high inflation than central banks

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US-based Economics Professor Steve Hanke has criticised Akufo-Addo for failing to temporarily stop the Bank of Ghana from determining the cedi's value against major trading currencies.

The professor of Applied Economics at the John Hopkins University in the US said the protest by Ghanaian traders about the drastic fall of the local currency against the dollar, the president is failing to heed sound advice.

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"Since Jan 1, 2020, the Ghana cedi has depreciated by a stunning 42.3% against the USD. Now, Ghanaians are shutting businesses down in protest. When will Pres. Akufo-Addo learn? Ghana must mothball its central bank and install a currency board!" he tweeted on Tuesday, August 23, 2022.
Prof Hanke
Prof Steve Hanke regularly comments on Ghana's economy. Source: UGC.
Source: Twitter

On Monday, August 22, members of the Ghana Union of Traders Association (GUTA) announced that they will close their shops on August 29, 2022.

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They say the incidence of the rapid fall of the cedi against the dollar and other major trading currencies and the high inflation were collapsing their businesses. For example, at the forex market on August 24, 2022, $1 was equivalent to almost GH¢10.

How A Currency Board Works

A currency board takes away the management of the exchange rate and money supply from a nation's central bank and institutes an extreme form of a pegged exchange rate.

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Bawumia playing blame game about cause of Ghana's economic mess – Prof Hanke

Apart from fixing the exchange rate, a currency board becomes important for maintaining reserves of the underlying foreign currency.

In a previous tweet, Prof Hanke said that currency boards outperform central banks when controlling inflation.

"In a study of 98 countries from 1950-93, I found that inflation was five times higher in countries with central banks than in those with currency boards," he revealed.

Professor Hanke Blasts Bawumia For Shifting Blame Amidst Ghana’s Economic Challenges

In a previous story, reported that Prof Hanke called out Vice President Mahamudu Bawumia for always shifting the blame about the true cause of Ghana’s current challenges.

Prof Hanke, who regularly tweets his brief comments about economic and political happenings in countries around the world, said Monday, August 22, 2022, that Ghana's “economics wizard” has not been forthright about the cause of Ghana.

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Cedi depreciation compels BoG to clampdown on 'law-breaking' forex bureaus

“When it comes to the source of Ghana’s economic problems, VP Bawumia plays the BLAME GAME. You know, it wasn’t me, it was the guy behind the tree,” he tweeted along with a news story in which Dr Bawumia blamed the Ukraine war and two other factors for the economic hardship.

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