BoG defends directives on foreign market operations

The Bank of Ghana (BoG) has justified the introduction of measures by it in recent times, saying, they were meant to streamline foreign exchange market operations to shore up the fallen cedi.

The bank also said the measures were simply reflecting enforcement of existing guidelines to halt dollarization in the country, and check mis-lodging of funds into the Foreign Current Account and Foreign Exchange Account.

The BoG has not revised a single principle, but only sought to introduce clarity into existing guidelines which have been flouted for a very long time with impunity, it said.

Dr Benjamin Amoah, Head of Financial Stability Department of BOG made these remarks on Wednesday, during a policy forum organised by the Institute of Economic Affairs (IEA) on the theme: “The Cedi Crisis: Implications and Way Forward.”

On February 4, the Central Bank of Ghana announced measures to shore up the cedi against the major foreign currencies, especially the US dollar, triggering mixed reactions from the business community and the public.

But Dr Amoah assured the business community and the public that there was no need to panic, because the BoG knew “what it is doing… it is a well thought of programme.”

He said BoG was convinced by its actions, and with the collaboration of the Ministries, Department and Agencies it would succeed in the implementation of the policies.

Dr Anthony Akoto Osei, Minority Spokesperson on Finance, blamed the fast fallen cedi on mismanagement of the economy through uncontrolled borrowing, irresponsible spending and over expenditure.

He said the cedi crisis has inflicted untold hardships on businesses, and lives of the people, leading to total loss of confidence in the economy.

Ghana’s total debt has risen from eight billion dollars in 2008 to 23 billion in 2013, with total expenditure having been 36 billion dollars, matching against total revenue of 26 billion dollars.

Dr Osei called on government to revise the budget, and ensure prudent fiscal expenditure management, but not to necessarily focus too much on growth. He said government ought to work seriously on eliminating ghost names from the public service payroll, avoid imposing new taxes, but focus on tax administration.

Mr Fifi Kwetey, Minister of State for Economic Planning and Financial Services debunked the notion that the fallen cedi stemmed from economic mismanagement. He said exogenous factors or shocks, particularly poor external market conditions for cocoa, oil and mining, put too much pressure on the local currency.

He said the depreciation of the cedi had been going back and forth since the 1990s, and therefore called on politicians to direct energies at discussing and analysing causes and the way forward for the structural challenges.

Mr Kwetey said government’s measures were designed to tackle the ailing cedi in both the short and long term, to guarantee stronger stability of the economy.

He, however, expressed worry that people preferred to go into buying and selling rather than venturing into productive sectors for export to generate more foreign exchange.