President John Mahama says his government is taking difficult decisions to fix the economy.
“We are taking some tough decisions. We are swallowing some bitter medicine and strengthening the fundamentals to ensure a better and brighter economic future for our people”, President Mahama told the Diplomatic Corp at the Peduase Lodge in the Eastern region on Wednesday.
He said his team is taking prudent economic decisions to improve the fiscal state of the economy.
“Our economic management team led by my capable Vice President Kwesi Amissah-Arthur has begun the implementation of our ambitious 2014 budget. This budget is designed to achieve a proper calibration of our macro-economic fundamentals to ensure that the economy continues to stay on a positive trajectory in order to address the fiscal deficit caused by expenditure overruns of the past”, he said.
President Mahama also said his Government “is exercising stricter financial discipline and public sector institutions are being encouraged to make the necessary adjustments that will result in improving the wellbeing of our people across the nation”.
The local currency, the cedi, is currently losing ground against the dollar and other international currencies.
The Central Bank has announced a series of measures toward arresting the fast depreciation of the local currency. The Bank of Ghana recently injected $20 million into critical areas of the economy as part of efforts to shore up the cedi.
In a statement issued on February 4, 2014, the Bank of Ghana said it has revised rules governing the operations of Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA) with effect from Wednesday February 5, 2014.
It has therefore ordered authorised dealers not to sell foreign exchange for the credit of FEA or FCA of their customers.
It also stated that cash withdrawals over the counter from FEA and FCA shall only be permitted for travel purposes outside Ghana and shall not exceed US$10,000.00 or its equivalent in convertible foreign currency, per person, per travel.
Also, no bank shall grant a foreign currency denominated loan or foreign currency linked facility to a customer who is not a foreign exchange earner, it added.
The Central Bank in a separate statement also says all exporters are required to collect and repatriate in full, the proceeds of their exports to their local banks within 60 days of shipment.
It warned that violation of any of the measures will attract punishment including pecuniary sanctions, jail terms, suspension and revocation of operating licences amongst others.
Meanhwile the Ghana Trades Union Congress, in a strongly worded statement, said the Government is to blame for the fast depreciating value of the cedi as well as Ghana's compounding economic woes.
In a long statement issued by the Congress on Wednesday, the TUC said it “shares the view that the dollarisation of the economy is partly to blame for the current messy situation. But Government itself is most guilty on this”.
It said: “We are in a country where custom duties charged by government are dollar-indexed. State agencies, like the Tema Development Corporation (TDC) sell land at dollar-indexed prices. The Ghana Institute of Management and Public Administration (GIMPA), along with other public educational institutions, have indexed their fees to the US Dollar. In such an environment, one can only expect rational economic actors to procure dollars ahead of time to shield themselves from exchange rate losses. Yet, Government turns round to blame innocent Ghanaians for dollarizing the economy”.
According to the TUC, “the US$20 million that the Bank of Ghana says it has injected into the economy is roughly equivalent to what one telecom company will have to transfer out of the country in a month”.
It added that: “With the value of the Cedi declining on a daily basis, the domestic prices of imports keep rising and this has adverse implications for the living conditions of workers whose salaries are fixed throughout the year”.
The statement signed by Secretary General Kofi Asamoah said: “…It is not just imported items that experience price increases. Landlords adjust their rents to be able to cope. Lorry fares continue their upward trend. In general, Ghanaians are facing difficult times as nearly all prices are going up.