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Vice President Mahamudu Bawumia, the sharp depreciation of the Ghana cedi can be traced to the restrictions imposed by the International Monetary Fund (IMF) at the Bank of Ghana to increase its foreign exchange reserves to about 800 million dollars.
Dr. Mahamudu Bawumia, head of the economic management team, said at the first city council meeting that the situation had affected the dollar's supply to businesses and the commercial public between February and March of this year. year.
Dr. Bawumia stated that "the most important and proximate cause of the recent depreciation is the inconsistency in time of a prior IMF action on the reserve target. At the end of January, as part of the seven prior actions to complete the IMF program, which had been transmitted to the Board on March 20, 2019, the Bank of Ghana was required to set net international reserves for March 14, 2019. same levels as at the end of December 2018. "
He added that, contrary to speculation, the Bank of Ghana had not spent any reserves to reinstate the following initial amortization. Some people misunderstood the IMF's obligation to the Bank of Ghana to increase its reserves by $ 800 million, which means that the Bank of Ghana would have used this money to reverse the depreciation of the cedi.
"The reason for the sudden reversal of the sharp depreciation we observed is that the market is corrected on its own. The sentiments, expectations and uncertainty of investors acknowledged that the fundamentals were much stronger than expected and that even without the IMF, the fiscal and monetary disciple was insured. "
Dr Bawumia added: "To deal with the prior IMF program measures, the Bank of Ghana had to build up reserves of the order of $ 800 million while the demand pressure was extreme. It had no room for maneuver to intervene in the market for intervention policy. This partly explains why Ghana experienced significant pressure during this period exacerbated by speculation. "
President Akufo-Addo had previously expressed his concern over the cedi's depreciation, while baduring that every effort was made to halt the decline and bring it back to stability, in order to improve the competitiveness of the Cedi. Ghanaian industry.
Expressing when ordering the Fujian Sentuo Ceramics Company in Kpone, Accra, on Wednesday, February 27, President Akufo-Addo said that he felt "extremely upset and worried about it". [depreciation of the cedi] as well.."
Bipartite Committee
Finance Minister Ken Ofori-Atta told Parliament that the government would set up a bipartite committee to investigate the depreciation of Ghana's cedi recently.
Mr Ofori-Atta told the European Parliament Thursday: "Mr President, the President has asked me to investigate the structural causes of the Cedi's depreciation and to propose measures to remedy the situation. The governor and I are going to set up a bipartite committee to proceed immediately. "
He was in Parliament to make a statement on Ghana's exit from a three-year IMF rescue program, on the success of Eurobonds as well as on the depreciation of Ghana's cedi.
Ofori-Atta said the recent depreciation of Ghana's cedi was not due to weak economic fundamentals, argued by University of Ghana economics professor Eric Osei Assibey. .
Dealer 1 cedis at $ 4.9 on January 27, 2019, the dollar reached 5.6 at a cedi on March 17, 2019, triggering widespread panic of companies.
The Ghana cedi traded at 5.15 ¢ on Wednesday morning against the US dollar.
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