TUC Worried About Continuous Depreciation Of Cedi
4/23/2012 8:30:58 AM -
Mr Kofi Asamoah - TUC Secretary General Organised labour has expressed worry over what it calls the rapid decline in the value of the Ghana cedi against its major trading currencies.
In particular, The TUC is worried because it says the current state of the cedi is worsening the living conditions of Ghanaian workers since it had pushed up the prices of goods and services and also forced a number of businesses that deal in the dollar out of business.
The Bank of Ghana has since the beginning of the year circulated more than US$800 million dollars in order to stem the fall of the local currency, but the cedi is yet to stabilise.
In a statement issued in Accra, the TUC cautioned that depleting the national reserves to shore up the value of the cedi amounted to treating the symptoms of the problem rather dealing with its root cause.
It attributed the free fall in the value of the cedi to what it described as failed economic policies championed by governments over the last three decades under the influence of the World Bank and the International Monetary Fund (IMF).
The statement signed by TUC Secretary-General, Kofi Asamoah, noted that the structure of Ghana’s economy made the nation over-reliant on imports while bringing down the value of exports.
These policies, it said, had been compounded by the over-liberalisation of the country's external payment system allowing for the transfer of foreign currency out of the country.
It also notes with concern that the legal limits of people and companies transferring millions of dollars through the country’s borders had rarely been enforced.
“The regime of allowing foreign currencies to be traded like any other commodity is part of the problem,” it pointed out.
The TUC believes that halting the free fall of the cedi would require a fundamental shift in policy and attitudes, particularly among the monetary authorities.
It called on the government and its agencies to review Ghana’s trade policies to ensure that in the medium to long term, Ghana put in place measures to wean itself from excessive imports.
“We expect them to address the many constraints that hinder domestic production and value addition and which perennially necessitate over-dependence on imports,” it said.
“The TUC also urges the BoG to curb speculation on the forex market by imposing a Financial Transaction Tax (FTT) on foreign exchange transactions. The FTT would not only help stem the speculative attacks on the cedi but importantly generate revenue for national development” the statement said.
The TUC concludes with a call on the government to break the tradition of excessive spending in this election year.
“The tradition does not inure to the benefit of the people of Ghana. Also, a discerning voting public is increasingly becoming averse to such fiscal recklessness” it said.
When the local currency was redenominated in July, 2007, it traded at GH¢0.92 to US$ 1.00. By the close of 2008, it had fallen to par at GH¢1.00 to US $1.00.
Since the beginning of the year 2012, the national currency has depreciated by 8.3 percent against the dollar compared to the two percent depreciation it saw the same period in 2011.
In January, 2012 alone, the value of the cedi went down by 5.9 percent.
The Bank of Ghana (BoG) has explained that the situation was transitory as a result of the increasing demand by businesses for the dollar to pay for goods and services procured in December for Christmas.