Policy Failures Are Responsible For The Cedi’s Depreciation

“”Says Banker

By Kwaku Anane-Gyinde, Aachen-Germany

A renowned Ghanaian Investment Banker Mr Alhassan Yakubu Tali has blamed the daily depreciation of the Cedi on the incoherent and often contradictory monetary policies being pursued by Dr Amissa Arthur, Governor of the Bank of Ghana and Dr Kwabena Duffour, the Finance Minister.

Mr Yakubu Tali who made these remarks on Deutsche Welle Radio over the weekend in reaction to a statement by the Governor of Ghana’s Central Bank noted that role of the central bank is to safeguard the value of its currency in terms of what it can purchase and this is the accepted norm and practice the world over.

According to him, when the prices of goods and services keep rising on daily basis as is the situation in Ghana today, the inevitable outcome is the loss in the value of the currency which in turn leads to loss of investor confidence and capital flight adding that the lack of an effective monetary policy to preserve the value of the currency and stabilise the economy is a major contributory factor to the country’s ailing economy.

Mr Yakubu Tali argued that maintaining price stability is crucial for the proper functioning of every economy because it encourages long-term investments and stability in the economy and said the Bank of Ghana and the Ministry of Finance and Economic Planning have collectively failed to formulate and implement the right policies and create the necessary conditions to accelerate economic growth.

He observed that in a desperate attempt to keep inflation to single digits, the BoG and MOFEP have adopted what he described as reckless monetary policies that have largely relied on containing the supply of money but which in practice is weak and has only succeeded in creating problems for the economy he added.

Mr Yakubu-Tali noted that in addition to the lack of equilibrium between the supply of and demand for money, the escalating trade deficit under the NDC has compounded the already tremendous pressure on the Cedi forcing it to depreciate to its lowest value in 18 years.

He found it regrettable that the same discredited policies that forced Ghana into HIPC in 2000 when Dr Duffour was the Governor of the Bank of Ghana, with Dr Amissa Arthur as Deputy Minister for Finance and Professor Mills as the Chairman of the National Planning Committee, are the same policies being pursued today.

Mr Yakubu Tali reminded Ghanaians that the unparelled economic growth under the NPP government under President Kuffour can be attributed to the prudent monetary policies pursued by the Bank of Ghana when Dr Mahamudu Bawumia was head of the Monetary Policy Committee and asked if any lessons have been learnt.