"GH¢14.5 =1 dollar": Economist Says Cedi Will Continue Depreciating Into The Foreseeable Future
- Economist Professor Godfred Bokpin says the cedi can only be temporarily stabilised against the dollar but will continue depreciating
- He blamed the phenomenon on poor macroeconomic policy support for the cedi and a lack of proper fiscal mismanagement
- He urged the government to institute proper macroeconomic policy support to reduce inflation, among others
An Economist and Professor of Finance at the University of Ghana says the cedi can only be temporarily stabilised against the dollar but will likely continue depreciating for much longer.
Prof Godfred Bokpin blames his gloomy projection on the lack of robust macroeconomic policy support for the local currency.
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In an interview on Joy FM on May 13, Prof Bokpin stated that the cedi has been on a downward slide since its introduction in July 1965.
He said that while there have been irregular periods of relative stability, the cedi's decades-long downward trajectory has continued unabated, often in foreign exchange even during optimal economic situations.
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The Economist bemoaned successive governments' inability to support the cedi with sound macroeconomic policies through responsible fiscal management and prudent monetary policy.
He explained that this has weakened the cedi's fundamentals, leading to its poor performance on the exchange rate market.
He stated that the exchange rate will continue to expose the currency's weak fundamentals until serious action is taken.
Analysts foresee a continued decline in the local currency's strength due to a significant gap between foreign exchange demand and supply.
Nonetheless, they expect liquidity conditions to improve by the end of the second quarter of 2024 following the International Monetary Fund (IMF) board's approval of Ghana's programme's second review.
This approval is anticipated to result in a disbursement of US$360 million as part of the IMF program, bolstering liquidity in the market.
IMF deal bearing fruits
President Nana Akufo-Addo has said Ghana's decision to seek support from the International Monetary Fund is bearing fruits.
The president linked the recent decline in inflation and the relative stability of the cedi to the support programme.
Speaking during a meeting with IMF Managing Director Kristalina Georgieva at the Jubilee House, President Akufo-Addo said the programme was satisfactory.
He believes the IMF support has contributed to a noticeable turnaround in Ghana's economy.
Moving forward, President Akufo-Addo said there was a need to strike a balance between the needs of Ghanaians while adhering to the IMF requirements.
Finance Ministry warns anti-LGBTQ+ bill could derail IMF deal
YEN.com.gh, the Ministry of Finance, has warned that approving the anti-LGBTQ could derail Ghana's programme with the International Monetary Fund.
The Ministry of Finance has cautioned President Akufo-Addo against assenting the recently passed bill.
The ministry also said Ghana will likely lose $3.8 billion in World Bank financing over the next five to six years.
Proofreading by Berlinda Entsie, journalist and copy editor at YEN.com.gh
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Source: YEN.com.gh
