Bawumia blame cedi depreciation on IMF restrictions

Business News of Wednesday, 3 April 2019

Source: Myjoyonline.com

2019-04-03

Vice President Dr Mahamudu Bawumia says the sharp depreciation of the country is likely to be affected by the International Monetary Fund (IMF) for the Bank of Ghana to $ 800 million.

Speaking at the Maiden Town Hall Meeting, Head of the Economic Management Team, Dr. Mahamudu Bawumia said the situation has affected the supply of the dollar to businesses and trading between February and March this year.

Dr. Bawumia said "the most important and proximate cause of the recent depreciation is the time inconsistency of an IMF priority action of the reserve target. At the end of January, the Bank of Ghana was required to provide net international reserves (NIR) on March 14, 2019 are the same levels as it was at the end of December 2018. "

He said, contrary to some speculation, the Bank of Ghana did not spend any reserves to revive the initial depreciation. Some people have misunderstood the requirement by the IMF for the Bank of Ghana to build up its $ 800 million to the Bank of Ghana.
"The reason for the sudden reversal in the sharp depreciation is that the market corrected itself. Investor sentiments, expectations and uncertainty that the fundamentals are much stronger than the financial and monetary disciple are badured. "

Dr. Bawumia added, "To meet the IMF's priority action program, the Bank of Ghana has had $ 800 million in its budget. intervention policy. This section explains why this is a problem that has been exacerbated by speculation. "

President Akufo-Addo has expressed concern about the depreciating effect of the situation, but it is also important to ensure that it is successful in improving the competitiveness of Ghanaian industry.

Speaking at the Fujian Sentuo Ceramics Company at Kpone in Accra on Wednesday, February 27, President Akufo-Addo said he feels "… extremely upset and anxious about it [depreciation of the cedi] too .. "

Bipartisan Committee

Finance Minister Ken Ofori-Atta told Parliament the government is to set up a bipartisan committee to investigate the depreciation of Ghana cedi in recent times.

Mr Ofori-Atta, addressing Parliament last Thursday, said, "Mr Speaker, the President has directed that the structural causes for the depreciation of the cedi and to propose measures to address the situation. The Governor and I will put a bipartisan committee together to proceed immediately. "

He was in parliament to make a statement on Ghana's exit from a three-year MFI bail-out program, the Eurobond success and the depreciation of Ghana cedi.

Mr Ofori-Atta said the recent depreciation of Ghana was a result of weak economic fundamentals, an argument supported by Professor of Economics at the University of Ghana, Eric Osei Assibey.

Trading 1 cedis for $ 4.9 on January 27, 2019, the dollar hit 5.6 to a cedi by March 17, 2019, triggering widespread panic by businesses.

The Ghana cedi was trading at GH ¢ 5.35 Wednesday morning against the US dollar.