A panel at a forum on the economy yesterday called for a focus on production as part of measures to ensure stabilisation of the exchange rate.
Professor Peter Quartey, Professor of Economics, Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana; Dr Joseph Obeng, President, Ghana Union of Traders Association (GUTA) and Philip Abradu-Otoo, Head of Research Department of the Bank of Ghana constituted the panel.
They were speaking at the first quarter of this year’s Graphic Business/Stanbic Bank Breakfast Meeting, held in Accra yesterday.
It was on the theme “Achieving Sustainable Exchange Rate Stability: Our Options.”
According to Professor Quartey, it was imperative that the economy was built on production rather than import which was mostly responsible for capital flight out of the country and adversely result in undue pressure on the Ghana Cedi.
The situation leads to the roll-out of temporary interventions by the Central Bank, which he described as unsustainable, to minimise the effect of the Cedi depreciation against the major trading currencies on businesses and individuals.
For a start, he stated, that government’s ‘Planting for Food and Jobs’, if well implemented, provides an avenue for increased production of foods, thereby reducing the country’s expenditure on food imports.
“We must first produce what we consume and grow our export base. If we effectively implement programmes like the Planting for Food and Jobs, we can reduce our food imports bill. Currently, statistics indicate that rice is Ghana’s sixth highest imported product. Since we have the market for rice, we must urgently focus on increasing its production and this will also help to keep the expenditure on rice in the country,” he added.
The BoG, he said must be pragmatic in regulating the forex exchange market, which has become an instrument for other currencies to be brought into the country without documentation to be changed into American dollars.
“The BoG must be tough in regulating the forex exchange market. We need to track the demand and sources of currencies brought into the country to be changed into other currencies. The black market also plays a critical role in exchange rate stabilisation,” Professor Quartey stated.
Similarly, Mr Abradu-Otoo urged GUTA to use its influence to pursue local production of goods they have the capacity to do to be able to export for foreign exchange and ensure balance of trade.
He said the BoG would soon undertake reforms in the operations of the forex bureau sector and intensify enforcement of regulations to clamp down on illegal practices.
When necessary, he said the central bank would apply sanctions including revocation of licence on operators who fail to comply with all the regulations.
In the meantime, they noted that the BoG has introduced new conduct guidelines to check financial market operation especially banks to ensure international best practices were followed.
On his part, Dr Obeng called on the government to invest in sectors that form the backbone of Ghana’s economy to spur industrialisation, increased export market and generate needed foreign exchange.
Earlier in a presentation, Governor of the BoG, Dr Philip Addison, advocated an improvement in export earnings and local content participation in the mining and oil sectors for increased foreign exchange to the country.
As a way to promote production, he said there was the need for favourable business environment and effective regulatory regime to make Ghana an attractive investment destination.
BY CLAUDE NYARKO ADAMS
