Dean of School of the Business University of Cape Coast, Professor John Gatsi has said that the $1.3 billion cocoa syndicated loan to be injected into the economy by the government will only reduce the rapid depreciation of the cedi.
“These are very short-term measures to coil depreciation of the cedi…but that will not stop the depreciation of the cedi going into the end of the year. So I am not sure that the government meant that this will be the solution for the cedi …I think what government wants to deal with is the rapid depreciation of the cedi…government is not saying it is going to reduce the value of the cedi from 10 Cedis to 7 Cedis… but at least stop it from going further depreciating,” Prof. Gatsi said.
This comes after the Information Minister, Kojo Oppong Nkrumah, during an interview on Accra-based radio station, Citi FM that the government will soon inject about $2 billion into the Ghanaian economy, as part of measures to address the Cedi depreciation.
“The Bank of Ghana introduced several measures in the short term to deal with it and on the back of that… the $750 million that we were expecting, all the paperwork has been concluded, and it should be hitting our accounts today or tomorrow.
“If I were you, and I was holding onto dollars, I would be selling them by now because there is a lot more dollar coming in from the $750 million and also from the Cocoa Syndicated Loan of about $1.3 billion,” the minister said.
During an interview on OilCity Radio’s morning show, Oman Yi Mu Nsem, he noted that the economic challenges currently facing the country are resultant to excessive borrowing by the government and not Covid-19 and the Russia-Ukraine war as Vice President, Dr. Bawumia claims.
“It is never true that the Covid-19 and the Russia-Ukraine war is to be blamed for our economic challenges…I don’t think the government and the vice president himself believe that …do you know the time we started talking about high borrowing by the government …when did the Russia-Ukraine war begin …February this year and when did our excessive borrowing begin …all the monies we got from Covid is far more than what we spent on Covid …so why is that a problem?” he lamented.
“The government has borrowed excessively and it is contributively a factor to the problem we are facing because we have about 40-48 percent of our borrowing in foreign currencies,”
Furthermore, he stated that the Free SHS policy is not the reason for the country’s economic downturn, as critics of the policy claim.
“We all know from the books that we are not using borrowed monies to finance Free SHS. We are using oil money purely to finance Free SHS. So the moment we start extending the excessive borrowing to free SHS then we want people to believe that free SHS is good and we used borrowed money to finance it …we are not using borrowed to finance it,” he noted.
According to him, the monies used to finance the programme are not as much as against other government development programmes.
“The major problem of free SHS is the boarding aspect and how procurement is done and whether or not the delivery of quality is acceptable to all of us,” he added.
To keep the cedi stable, he suggested that the government reconsider its import levels
“Government knows that our export’s value addition is weak, the government knows we are importing things that we are not supposed to import and government also knows we are managing debt in a manner that our commitment to pay interest and in foreign currency is a problem.
“Government knows that if you are importing about GHS600 million poultry products in a year …you will need to check your agriculture so those are the things we are supposed to do,” he stressed.
The cedi has dropped by at least 35 percent in 2022, according to Bloomberg, making it the world’s worst-performing currency after Sri Lanka’s rupee among 150 economies tracked.
