How the NPP arrested the cedi in 100 days

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Tue, 18 Apr 2017 Source: dailyguideafrica.com

The vice president, Dr. Alhaji Mahamudu Bawumia says the New Patriotic Party (NPP) government led by President Nana Addo Dankwa Akufo-Addo has arrested the Cedi in just 100 days in office.

According to him, the appreciation of the Cedi against the major foreign currencies such as the dollar and pound has brought some relief to investors and business owners.

“When we came in, the cedi was running but essentially we have arrested it and the Inspector General of Police (IGP), David Apeatu has the keys. He has locked it up”, Dr. Bawumia said when speaking at Joy News’ 100 days Town Hall event held yesterday at the New Court Complex in Accra.

The Cedi had, only months ago, depreciated against the dollar and some of the international currencies, at an alarming rate.

Just last month, it was trading close to 5 cedis to a dollar, a rate that was depressing to many importers and businessmen alike.

Within weeks however, the cedi is enjoying some stability and is actually appreciating against the dollar and the pounds sterling.

The local currency has appreciated by some 0.41 percent since the beginning of the year, selling at GH¢4.16 to the dollar among commercial banks as at Wednesday April 12, 2017.

The Vice President said the Nana Akufo-Addo-led administration in 100 days has accomplished what detractors thought could not be achieved.

Explains Cedi Stability

Dr. Bawumia attributed the cedi’s recent robust performance to a “massive increase in Ghana’s foreign exchange reserves,” secured in just 100 days of the current administration.

Dr Mahamudu Bawumia explained that when the Nana Akufo-Addo government took the reigns of power in December last year, it moved to neutralise the harsh economic effects of Ghana’s high indebtedness by re-profiling the public debts.

Debt re-profiling usually involves financial restructuring to replace expensive debts with less expensive ones.

The Finance Minister, Ken Ofori-Atta, earlier this month led a team of government officials to raise about 2.25 billion dollars through various domestic bond issuances, constituting a total of $1.13 billion through the issuance of 15 and 17-year bonds at a coupon rate of 19.75 percent.

The two transactions, according to the ministry, are the largest amount issued in the sub-region and indicate renewed investor confidence in the country.

Government’s Policy

Finance Minister, Ken Ofori Atta has also said a clear thought-out policy to raise revenue and manage expenditure underpinned by a solid agricultural policy intervention is responsible for the recent stability of the cedi.

Some critics have suggested the recent stability is artificial and may soon depreciate.

But speaking to Joy News’ Elton John Brobbey, the Finance Minister Ken Ofori Atta said the cedi’s rise is backed by policy and hardwork.

“The budget clearly indicated what I termed a preferential option for the poor, at the same time a private sector led growth.”

“By abolishing those taxes and creating the tax relief, it created economic freedom for people to feel energised and for the entrepreneurship spirit of Ghanaians to come up.”

“With that energy, we began to see a pickup in productivity. The Bank of Ghana went on to reduce the interest rate by 200 basis points and that was a good indicator of where things are going,” he explained.

The Minister said the ability of the government to use its network and relationships to renegotiate its debt of about $2 billion cemented the fact that there is momentum building in the economy.

Source: dailyguideafrica.com