Maintain fiscal discipline to sustain Cedi stability – Gov’t told
Majority of participants at the Graphic Business Stanbic Bank Breakfast Meeting have cautioned government to maintain fiscal discipline to help sustain the stability of the Cedi against other trading currencies, especially the US Dollar.
According to them, there is the need to follow fiscal policies that will create room for a balanced trade market to improve exports.
A panel that discussed the performance of the cedi at the Graphic Business Stanbic Bank Breakfast Meeting included Prof. Peter Quartey from the Institute of Statistical, Social and Economic Research (ISSER), Dr. Joseph Obeng from the Ghana Union Traders Association (GUTA) and the Managing Director of Stanbic Bank Mr. Alhassan Andani among others.
The local currency, the Ghana cedi on the interbank foreign exchange witnessed a depreciation of about 8 percent against the dollar from GHC4.8 Ghana Cedis to a US currency in December 2018 to over GHC5.20 pesewas by the Middle of March in 2019.
The currency has since then stabilized at 5 cedis 1 pesewa for some weeks now, after fresh injection of capital such as the $750 million Standard Bank bridge facility, some COCOBOD funds as well as the $3 billion Eurobond.
Cautioning government on overshooting its budget in election years, Prof. Quartey stated that there is the need to check expenditure in 2020.
“Gradually we’ll be heading towards elections in 2020. Are we going to repeat the mistake of overspending? We need to guard against that critically,” he stressed.
On his part, the President of GUTA Dr. Obeng called on government to channel investments into areas where Ghana has a competitive advantage to create more jobs.
The Managing Director of Stanbic Bank Mr. Alhassan Andani, urged Ghanaians to take advantage of the good economic conditions prevailing in the country to manufacture and produce more for export, in order to earn more foreign exchange.
“When I joined banking interest rates were around 45%, today banks can lend between 15% and 23%. That is the lowest rate I’ve seen in this market in over two decades. That is a strong stimulant to the private sector. Households should take advantage of this to produce domestically for export, given the prevailing enabling environment. If not we’ll get back to that vicious cycle and borrowing and accumulating debt.”
Expressing his thoughts on the state of the local currency, the Head of Research at the Bank of Ghana (BoG), Phillip Abradu-Otoo said the macroeconomic gains could be leveraged for growth.
“Regarding how confident I am that the Cedi will continue to hold its value, I am very confident. This is because the managers of the economy are working had to sustain the macro gains made so far. We expect inflation to go down, we expect our current account balances to continue to narrow and then we also expect the fiscal deficit to be well behaved this year. All these things should support a stable currency going forward.”