By Professor Charles Ackah, a distinguished expert in Finance and Economics at the University of Ghana, has criticized the government for its failure to tackle the structural issues contributing to the depreciation of the Ghanaian cedi.
During a recent press briefing, Dr. Mohammed Amin Adam, the Minister of Finance, elucidated that the depreciation of the cedi is partially attributed to significant payments disbursed to contractors and Independent Power Producers (IPPs).
While acknowledging that the recent rapid depreciation of the cedi might be partly linked to the settlement of arrears owed to contractors and Independent Power Producers, Prof. Ackah emphasized that the government must take decisive action to address the situation.
Speaking to Joy Business during the launch of a report on digital technologies and agri-based economies in Central and West Africa, organized by the Institute of Statistical, Social and Economic Research (ISSER), he urged the government to prioritize rectifying the supply-side factors impacting the cedi.
“I think the problem is more than paying contractors and the IPPs. I think we have a structural problem which is we don’t have enough forex in the country because if we do, and even you pay contractors and they exchange it, we will still have enough to release into the market. I just don’t think there is sufficient dollars in the market”, he said.
Prof. Ackah advised the government to be transparent about the forex situation and engage stakeholders to collectively tackle the issue.
He emphasized the critical importance of identifying and addressing the root causes of the dollar supply challenges promptly to instill confidence in the market regarding stable supply.
Offering recommendations, he underscored the necessity for a concerted effort to bolster the industrial sector, thereby enhancing Ghana’s exports and increasing foreign earnings. This deliberate strategy, he argued, is essential for stabilizing the currency.
“The supply side has to be fixed. It will help in export. We don’t have enough Ghanaian industries, which is why we are struggling”, he said.
Furthermore, Prof. Ackah advocated for a reevaluation of remittances in the country.
He suggested implementing a system that facilitates the enhancement of remittances through deeper engagement with relevant stakeholders.
“If we don’t have industries producing at scale then we can look at remittances to improve on forex. The question is how is remittances doing? I think we need to look at that”, he suggested.
Finance Minister Dr. Mohammed Amin Adam has assured Ghanaians that the economy possesses an ample supply of foreign exchange to fulfill the nation’s requirements. He cautioned against panic purchases of forex, emphasizing the stability of the exchange market.
