Ken Ofori-Atta, Finance Minister
The Finance Ministry recently set up a 38-member body called Foreign Exchange Development Committee, charged with the responsibility of reviewing the existing forex regime and recommending workable solutions for a stable exchange regime.
However, some analysts have questioned the rationale behind the committee's establishment since they are of the view that it is a duplication of the Bank of Ghana's mandate - with some calling for its scrapping altogether.
Prof. Peter Quartey, Director-Institute of Statistical and Social Research (ISSER), spoke to this paper and expressed the view that since the Bank of Ghana has the core mandate of ensuring price stability and keeping the exchange rate in check, there is no need for the Ministry of Finance to set up another committee to do the same work.
His position tallies with renowned economist and investment consultant, Kwame Pianim, who is calling for the committee's immediate dissolution. Pianim has described the Committee as a public relations stunt that must be scrapped.
Mr. Pianim is of the considered view that setting up such a committee undermines the constitutional responsibility of the central bank, since managing the currency is its constitutional responsibility.
Professor Quartey, on the other hand, believes the Committee's approach and composition shows it may even come out with the desired results. However, he is of the view that if the Committee is to succeed, then it needs to go beyond normal committee discussions and commission a study to do an in-depth analysis of the whole thing.
The cedi depreciated against the US dollar by about 13 percent in 2019, making it the worst performance since 2015 when depreciation was more than 14 percent. Dean of the School of Business at the University of Cape Coast, Professor John Gatsi, has also waded into the discussions and believes establishing the FX Committee amounts to the "highest point of political interference."
This position has been roundly refuted by Dr. Gideon Baoko, spokesperson of the Vice President, whose position is that there needs to be some synergy between the executive's management of the fiscal and BOG's handling of the monetary aspects of economic management.
Meanwhile, Deputy Finance Minister Charles Adu Boahen says the said committee is only complementing BOG's efforts.
One thing is clear: the committee's establishment follows a promise by government to establish a bi-partisan committee to investigate the structural causes of the cedi's depreciation and propose measures accordingly.
As the debate rages on, we believe setting up of the Committee amounts to massaging rather than curing the symptoms; and that the cure really lies in boosting the country's productive base, since the cedi's volatility is a function of the forces of demand and supply.
