Cedi Appreciation Not Good For Economy – Economist

An economist and senior lecturer at the Economics Department at the University of Ghana says the recent appreciation of the country’s currency against other major currencies is not good for the country's economy.

Dr Osei Assibey said such rampant appreciation of the cedi against major foreign currencies does not bode well for other sectors of the economy, particularly the export sector.

'Stability is what is needed,” he said on Joy FM’s Newsfile programme, stating that the apparent swing of the cedi like a pendulum up and down the economic ladder does not augur well for the economy.

The cedi from 2012 saw continued depreciation, a situation that affected every sector of the economy.

The Bank of Ghana (BoG), in a desperate measure, instituted some forex measures to arrest the situation.

The measures did not work out as planned and the economy kept deteriorating.

The government then went for an IMF bailout of some $900 million to strengthen the economy.

As a new measure to arrest the fall of the cedi, the Bank of Ghana (BoG) has been pumping some $20 million a day into the economy. That has led to a rapid appreciation of the cedi against the major trading currencies.

Within the last two weeks, the cedi has appreciated 22 percent against the dollar, a situation that has provoked mixed reactions.

The development has also led to some reduction in prices of petroleum products, but some economists believe the instability is not good enough.

The economics lecturer at the University of Ghana said the Bank of Ghana should set an upper and lower limit within which the cedi should operate.

Allowing it to depreciate or appreciate without control maintained is suicidal for the economy, Dr Assibey.

He also stated that the $20 million pumped daily to shore up the cedi is not sustainable and asked government to explore other alternative measures to ensure stability of the currency.

A member of the NDC legal team Abraham Amaliba said the IMF's intervention is beginning to bear fruit.

He said critics of the managers of the economy have been “dazed” by the performance of the cedi, adding, “the Bank of Ghana pulled off the carpet under their feet.

“What we are seeing is the impact of the IMF policy. Everything has a gestation period, the three-year programme is beginning to bear fruit in five months,' he said.

GNA