Minority Leader, Dr. Cassiel Ato Forson has pointed to government’s financial policies as the primary cause of the rapid depreciation of the Ghanaian Cedi.
According to him, the government’s allocation of GH¢7 billion to contractors as an off-budget, allegedly for buying dollars is a move that worsened the Cedi’s depreciation, Top of Form which has fallen by more than 70% since July 2022.
“Since 2022, the Cedi has depreciated more than 70% and the current problem is primarily a result of how the government is spending.
“In the last month, the government has borrowed over GH¢7 billion from the T-bill market and used this money to pay contractors who have also purchased dollars hoping that the Cedi will depreciate and so even if you go to the market to buy dollars, you struggle to get it and this is because people lack confidence in the economy.”
During a press conference organized by the Minority Caucus on Wednesday, May 15, Dr. Forson addressed the concerns voiced by the business community and trade unions regarding the rapid decline of the Cedi against the US dollar, which recently reached GH¢15 to $1.
Speaking on the same decline in an interview on Citi FM, Dr. Forson emphasized concerns over the lack of confidence in the economy, caused by the government’s spending patterns.
“The Ministry of Finance is approving these payments, and the contractors are using it to buy dollars and it is easy to track this. Unless you are not watching the fiscal space, you will see that these monies are used to buy dollars.
“My concern is that it is coming at a time when we have defaulted on our external debts, and since we have defaulted on it, one would have thought we should be seeing a lot of forexes, but that is not the case,” Dr. Forson added.
Dr. Forson condemned the Ministry of Finance’s approval of these payments, stating that the funds were being used to buy foreign currency
Highlighting the issue’s timing amidst external debt defaults, he expressed expectations of increased foreign exchange reserves, which he says have not happened.
He further warned that the ongoing fiscal trends might disrupt the IMF programme by year-end. He stressed how fiscal policies play a key role in this prediction.
Regarding the upcoming IMF review needed to access the third tranche of the $3 billion External Credit Facility, Dr. Forson pointed out a problem. He said the review would use outdated data from the previous year, not reflecting the current economic situation.
“Let me be honest with you, this programme is certainly going to be derailed by the end of this year and it is going to take a while. I have no doubt about that… let’s wait and see. It is actually on the back of the fiscal,” he stated.
“They were on course but as you know the review dates back. So, the next review is going to use the data as of December last year. So, the programme indicators to check whether the programme is performing or not is going to use data six months before the time of review.
Source: Comfort Sweety Hayford/ATLFMNEWS
