By Dr. John Kwakye, the Director of Research at the Institute of Economic Affairs (IEA), has urged the government to explore avenues for obtaining full ownership of Ghana’s natural resources. He suggests utilizing these resources, such as gold, to bolster the Cedi’s value, thereby strengthening its position in global trade.
Dr. Kwakye underscores that leveraging resources like gold to support the Cedi could elevate it to become one of the most robust trading currencies worldwide, especially as the government grapples with addressing the currency’s devaluation.
Various trade unions and associations have expressed concerns about the depreciation of the Cedi, citing its detrimental impacts on their businesses.
Currently, on the forex market, a dollar is being sold at GH¢14.90, marking a significant increase from the GH¢10.97 exchange rate during the same period in May 2023.
According to Bloomberg, the depreciation of the Cedi is worsening due to a decline in cocoa earnings. Exports fell by approximately $500 million in January and February 2024, attributed to adverse weather conditions and the prevalence of swollen shoot disease.
During an appearance on the Citi Breakfast Show with host Bernard Avle, Dr. Kwakye emphasized that depending on external assistance to bolster the Cedi and the economy is not a sustainable solution. He noted that such reliance often leads to recurring shortfalls and negative outcomes.
“The underlying fundamental structure of the economy hasn’t changed and I have always said that relying on external loans to support your currency is not sustainable because you will eventually have to pay back and when you begin paying back, there will be outflows and so it looks like we are now just waiting for the IMF’s $360 million to be stronger for a while and return to our struggling state.
“The Cedi is vulnerable and we can only stop the fall temporarily and the depreciation will resume again.”
“Your reserves support your currency and so our national reserves support the Cedi and so wherever your reserves are coming from, for example, in gold, what we need to understand is that we need to own our own reserves of gold and we need to take ownership and increase the reserves.
“If we take ownership of our resources, we can use them to back our currency to strengthen it,” the economist added.
