Ghana won’t join ECO in 2009- Central Bank Official
A senior official of the Bank of Ghana has told the dailyEXPRESS that the West African Common Currency (ECO) is not starting in 2009.
Dr. Benjamin Amoah who is in charge of the Bank's Monetary Policy Analysis says, “it is not factual that we are joining the Eco in 2009. December 2009 is the target for locking-in into the single currency zone. But the time to start using the Eco currency at this point is unknown.”
He was reacting to growing concerns about the rationale for spending huge sums of money to print new currencies and undertake a public education campaign for the July 2007 Cedi re-denomination when the country will be joining the ECO in two years.
Dr. Amoah says, it is not yet determined that Ghana will join the ECO explaining further that the efficiency gains from the 2007 Cedi re-denomination will even enable the country join the ECO as a stronger partner.
“Re-denomination is a requirement for joining a common currency. In fact Romania in their preparation to join the European Union and start using the Euro, they re-denominated and dropped off four zeros from their currency. Turkey also had to re-denominate to join the Euro. And Ghana in joining the ECO zone will have to re-denominate in order to bring the exchange rate to the dollar close to what pertains in the West African sub-region. “For instance, Ghana's exchange rate to the dollar is close to 9,200, Gambian Dalasi to the dollar is 27.65, Nigerian Naira is 127.90 Sierra Leone's Leones is 2,973 to the dollar. The only way there can be uniformity in the exchange rate when these countries convert to the ECO is for their exchange rates to the dollar to become close to each other's, and that is what Ghana is doing,” Dr. Amoah said.
The Central Bank's clarification of the ECO debate follows concerns expressed by a grouping of some opposition political parties, the Committee for Joint Action (CJA) about the timing of the exercise and the huge expenditure involved.
“The timing of the re-denomination exercise is also a matter of grave concern to us. This is especially so when the Bank of Ghana had announced that Ghana is to join the Eco currency zone in 2009. Indeed, we are unable to understand the rush to re-denominate the cedi and the huge expenditure in printing new currency notes only to join the Eco in a matter of only two years,” the group complained.
A leading member of the CJA and Managing Editor of the Insight newspaper, Kwesi Pratt Jnr said at a press briefing called by the group that “the handling of the re-denomination exercise has also left much to be desired. At the time when the Governor of the Bank of Ghana went before Parliament to defend the exercise, he could not even provide an estimate of how much it would cost to print and circulate the new currency or the cost involved in educating the Ghanaian populace on this re-denomination exercise.”
Explaining away concerns about cost, Dr. Amoah who could not provide the exact cost of the exercise said “the Central Bank prints currency every year to take care of wear and tear of the old notes in circulation. It costs the country a lot of money to print several notes at a time. But when we re-denominate, it will become economical and less expensive to print as only fewer denominations will be printed with the same economic value.”
The Head of Monetary Policy Analysis and Financial Stability Department of the Bank of Ghana also told the dailyEXPRESS that while it is possible to ensure convenience and portability with the use of cheques and credit cards, the country's economy at the moment cannot support such systems.
According to him, there are millions of Ghanaians in several cities, towns and villages who depend on cash to survive and cutting them off in order to intensify use of credit cards and cheques by just the few million bank account holders will create serious economic havoc for the country.
But the CJA is not convinced. The group insists that “the Bank of Ghana and the Banking Community are using currency portability as a major reason for the re-denomination exercise but there are various means of achieving portability without re-denomination. The increasing use of cheques for transactions and the introduction and mass use of credit cards could also achieve portability without full blown re-denomination.”