Finance Minister Ken Ofori-Atta has rubbished assertions that the recent depreciation of the cedi against major trading currencies on the international market is the results of weak economic fundamentals.
“…It is clearer from the data that the depreciation of the cedi was not due to weak economic fundamentals,” he told Parliament Thursday when he appeared to brief the House on the depreciation of the cedi.
He also addressed the MPs on Ghana’s exit from the three-year IMF extended credit facility and the success of the 3 billion-dollar eurobond secured by the government last week.
As the cedi depreciated from 4.9 cedis early this year to around 5.86 cedis per dollar in March, many people started questioning the health of the local economy, which the Akufo-Addo government claims to have strengthened within the last two years.
Prices of goods and services have since early this month gone up marginally, with petroleum products recording two increments within two weeks.
The cedi has however started to rebound. As of Thursday March 28 morning, it was trading around 5.4 cedis per dollar.
Some critics argued the current challenge facing the cedi is no different from what was experienced in 2016 which the then vice presidential candidate Dr Mahamudu Bawumia blamed on weak economic fundamentals.
Speculative behaviour to blame
But speaking on the turbulence suffered by the cedi recently, Mr Ofori-Atta disagreed with critics, indicating the current problem with the cedi is “a combination of structural rigidities and apparent speculative behaviour of portfolio investors and market participants”.
“We have done a lot of work to ensure that the economic fundamentals are robust and able to support economic growth and transformation,” he said.
Providing statistics, he argued the performance of the cedi under the Akufo-Addo’s government has been better than it was in Mahama’s era.
“It is also noteworthy that while this is a challenge, the cedi has however performed better over the last two years than when compared specifically to 2012 to 2016,” he stated.
In 2012 he said the cedi depreciated by 15.95 per cent and 12.81 per cent in 2013 but peaked at 32.45 per cent in 2014 and then up to 15.68 per cent in 2015, he said, noting in 2016 it depreciated by 9.65 per cent.
“The cumulative depreciation from 2012 to 2016 was 65.423 per cent. Between December 2017 through the whole of 2018 [and] 21 March 2019, the cedi has depreciated by some 17.32 per cent compared to 25 per cent in 2015 and 2016.
He said despite the cedi’s recent suffering, the economic fundamentals are strong, indicating there has been “improvement in our balance of payments which government has achieved in the last two years”
Meanwhile he said the president has ordered an investigations into what is accounting for the “structural causes” for depreciation of the cedi, and in view of that, “the Governor [of BoG] and I will put a bipartisan committee together to proceed immediately”.
The committee, he said, will also propose measures to address the situation.
By Stephen kwabena Effah|3news.com|Ghana