Professor Godfred A. Bokpin, a Finance expert at the University of Ghana Business School (UGBS), has attributed the consistent depreciation of the Ghanaian cedi to a series of policy failures by successive governments.
In an interview on the Morning Starr with Francis Abban, Professor Bokpin emphasized that injecting funds from the International Monetary Fund (IMF) alone cannot address the challenges facing the cedi. He urged the government to address the underlying fundamentals to effectively manage the currency’s depreciation.
“It’s the accumulation of policy failures and lack of vision that cluster at some point, so it’s not like the cedi misbehave on its own. It is the reflection of the fundamentals, and the fundamentals don’t deteriorate in a week,” Professor Bokpin explained.
He highlighted that the deterioration of the cedi reflects long-term policy shortcomings and cannot be rectified swiftly with short-term measures. “You don’t solve that problem with the occasional injection of flows by the IMF supporter programs,” he added.
Background:
The Minister of Finance, Dr. Mohammed Amin Adam, has linked the rapid depreciation of the Ghanaian cedi to various factors, including payments to contractors and high cedi liquidity.
Financial analysts have projected further depreciation, with estimates ranging from GHc16 to GHc18 against the dollar.
Addressing the media during his monthly briefing on the economy, Dr. Amin Adam noted the recent pressure on exchange rate movements but highlighted the cedi’s stability against other currencies. He pointed out a significant reduction in the cedi’s depreciation against the US Dollar from 54.2% at the end of November 2022 to 27.8% at the end of December 2023.
He further stated that the cedi’s stability has continued into 2024, with a cumulative depreciation of 14.2% as of May 20, 2024, compared to 20.7% recorded during the same period in 2023.
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