HALT FREE FALL OF CEDI

Page 7: Daily Graphic, April 23, 2012. THE current level of depreciation of the cedi has raised concerns among key stakeholders in the economy with a call for urgent steps to arrest its rapid decline. Since the beginning of 2012, the cedi is reported to have depreciated by 8.3 per cent against the dollar compared to the two per cent depreciation in 2011. The Association of Ghana Industries, the Ghana Trades Union Congress and the Centre for Policy Analysis have all taken issues with the free fall of the cedi. Failed economic policies, over-liberalisation of the economy and the current political tension in the country have been cited as some of the causes of the decline of the cedi. The Bank of Ghana, in seeking to address the rapid decline of the cedi, has raised the policy rate from 13.5 per cent to 14.5 per cent. It has also injected more than $800 million into the local economy to shore up the value of the cedi. Recently, the Minister of Finance and Economic Planning, Dr Kwabena Duffuor, issued a directive to all Ministries, Departments and Agencies (MDAs) not to go beyond the budgeted expenditures set for the 2012 fiscal year so as to not take the economy out of gear. We believe these measures are short-term and what the country needs are long-term solutions. The long-term measures may include an increase in our exports, revival of local industries and our dependence on locally produced goods. The local industries must look forward to also relying on local raw materials for their production and thereby help expand the local economy. We live in a country where we depend on foreign goods for everything we do. How do we expect to strengthen our local currency when we have to import everything from aeroplane to toothpick? Until recently when the Ghana Standards Authority banned the importation of second-hand panties, for instance, they remained a preferred choice. What do we also expect when we have “dollarised” our economy? From hotels through some basic schools, dollars are charged for services and fees while the authorities look on. In other jurisdictions, every transaction must be done in the local currency. Ghana is not the only liberalised economy in the world but if the others have been able to do it, why can’t we do it? We all have a role to play in stabilising the cedi. It is good that the attention of our politicians and political activists has been drawn to the problems they create for the economy through the unguarded comments and crave for political power at all cost. A renowned economist, Dr Joe Abbey, said it all when he noted that though all the appropriate monetary and fiscal policies were in place for a stable currency, “inflammatory statements from politicians have tended to poison the atmosphere, thereby sending wrong signals to investors who have invested heavily in the country’s markets”. The Daily Graphic believes that we all have a stake in halting the rapid decline of the cedi. We must stop faulting governments because nation-building is a collective enterprise.