Foreign reserves must stay away from African leaders – John Kwakye tells Akufo-Addo

The Director of Research at the Institute of Economic Affairs (IEA), John Kwakye, has hit against the president’s suggestion to withdraw some percentage of the country’s reserves from sovereign accounts.

According to him, African countries have not been able to prove that they can build strong buffers for their reserves.

Therefore, until they can do that, the reserves must stay in the foreign accounts.

He wrote on his X platform on February 21, 2022: “Until we are able to build firewalls around our reserves locally to protect them from plundering by African leaders, they should remain where they are in foreign institutions.”

The economist added, “One reason for saving our reserves in foreign institutions is to keep them out of reach of plundering African leaders. Until we can protect the reserves locally, which I doubt that we can, they should remain where they are.”

John was reacting to the president’s speech at the Presidential Dialogue on African Union Financial Institutions organised on the sidelines of the 37th African Union summit in Addis Ababa Ethiopia.

During his speech, he proposed that all African countries take a collective decision for all countries to withdraw 30% of foreign reserves and deposit them in African Institutions.

Akufo-Addo said: “We're all in agreement that the way the Global Financial architecture works at the moment, it doesn't work in our favour and that there is a need to make some fundamental systemic reforms. As it stands, in virtually all our countries, we hold our reserves in foreign Banks attracting largely negative rates of Interest.

"We should decide that a minimum of 30% of the reserves of each one of us (African States) Sovereign reserves should be invested in the African multilateral institutions.

"I speak about the ADB, I speak of Afreximbank (African Export-Import Bank) which will strengthen their balance sheets and strengthen their capacity also to facilitate more and more resources for our development," he added.

SSD/NOQ

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