Finding causes of depreciation of cedi: Bi-partisan c’ttee to probe cedi fall – Finance Minister

The Minister of Finance, Ken Ofori-Atta has stoked economic debate in Parliament over who is a better manager of Ghana’s economy between the governing New Patriotic Party (NPP) and the opposition National Democratic Congress (NDC) when in Government. 

In a statement on the floor yesterday, Mr Ofori-Atta disclosed that President Nana Addo Dankwa Akufo-Addo had tasked him to investigate the cause of the recent free-fall of the cedi against major trading currencies.

“Mr Speaker, the President has directed that I investigate the structural causes for the depreciation of the cedi and to propose measures to address the situation. The Governor and I will put a bipartisan committee to proceed immediately,” he told the lawmakers. 

Government had come under intense pressure since the turn of the year as the cedi depreciated by about 15 per cent to the U.S dollar resulting in the increase of goods and service. 

However, since the bond was secured, the local currency has experienced sharp recovery against the dollar, a solution the Minority said was temporary and does not holds the solution to the cedi depreciation. 

In his three-point statement on Ghana’s imminent exit from the Extended Credit Facility with the International Monetary Fund, the re-bounce of the cedi and the successful US$3 billion bond issuance, Mr Ofori-Atta said measures, based on the existing “sound” economic fundamentals have been put in place to ensure the stability of the cedi was sustained. 

According to Mr Ofori-Atta, the cedi under the erstwhile NDC led-government depreciated by 65 per cent cumulatively between 2012 and 2016 and 25 per cent in 2015 and 2016 compared to 17 per cent in 2017 and 2018 under the current government. 

The soft-spoken minister said securing the bond was a demonstration of confidence in the Ghanaian economy and would be beneficial for the country because it shows that the country had access to long dated Eurobond financing, confirms long-term financial support from the external financial market and validates a successful completion of the IMF programme.

On exiting the IMF’s extended credit facility, Ken Ofori-Atta said government had met all the conditions and to ensure the irreversibility of the gains made under the facility, he said fiscal discipline was being maintained to avoid off budget expenditure, enhance public debt management among others. 

Tracing his way back into the NDC regime between 2013 and January 2017, the minister said the management of the economy got out of the previous administration’s hands hence the bailout from the IMF but the Akufo-Addo government had worked hard to take the country out of the programme to bring prosperity to Ghanaians.

But commenting on the statement, Isaac Adongo, a member of the Finance Committee and NDC member for Bolgatanga Central said Mr Ofori-Atta was being economical with the truth. 

He said Ghana was not exiting the IMF programme because it met the conditions but based on a waiver it requested for non-observance of performance criteria which the Briton Wood institution had granted.

“Mr Speaker, we are worse than we entered the IMF and that is a fact,” the first term MP stated.

Ghana’s total wage bill in 2016, Mr Adongo said was GH¢14 billon, a figure which had jumped to GH¢22 billion representing a 53 per cent increase, warning that “if this continues by the year 2020, we would have doubled our wage bill that we left in 2016. 

“That is the height of indiscipline and yet the Finance Minister says he is right-sizing the government. What sort of right-sizing is it that you right-size and increase your wage bill by 53 per cent,” he stated.

Contrary to claims by the Finance Minister in the 2017 budget that government was re-profiling the country’s debt in order to reduce interest payments, Mr Adongo said the country’s interest payment had increased from GH¢11 billion in 2016 to 15.8 billion in 2018 and projected to hit 18.6 billion in 2019.

What was worrying, he said, was that government now goes to borrow to pay for goods and services amounting to GH¢10.6 billion every year to pay for “consumption” at the expense of capital investment. 

In his view, the recent seven, 12 and 31-year bonds was not because the investors had confidence in the current government but did so because “this government has only two [of its four] years left.”

On the cedi depreciation, Isaac Adongo said the troubles of the local currency was not over as Bloomberg, a global tracker of currencies had reported that the cedi was still selling at  GH¢5.54 to the U.S dollar as of yesterday, urging the finance minister to stop politicising the cedi and find a sustainable way of keeping it stable. 


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