Relying on IMF, World Bank to bolster cedi ‘lazy man’s approach’- IEA Director

Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA), has condemned the government’s overreliance on foreign aid to prop up the local currency.

During a press briefing held at the IEA headquarters on Wednesday, April 3, Dr. Kwakye expressed concerns over the sustainability of Ghana’s economic strategy, particularly its dependence on funds from institutions like the International Monetary Fund (IMF) and the World Bank.

Labeling this approach as a “lazy man’s approach,” he highlighted the risks associated with such borrowing, including Eurobonds and cocoa syndicated loans.

He warned that the pressure on the Ghanaian cedi could intensify when these loans become due for repayment.

Quoting statistics from the recent Monetary Policy Committee meeting of the Bank of Ghana (BoG), Dr. Kwakye noted that the Cedi experienced a depreciation of 6.8 percent against the US dollar in the year leading up to March 20, 2024.

“The Governor admitted that the foreign exchange market came under some pressure, both seasonal and non-seasonal-in February and early March. He reported that in the year to 20th March 2024, the Ghana cedi recorded a depreciation of 6.8 percent against the US dollar. He, however, stated that the cedi “continues to recover its value.” But the question is by what measure?

“Certainly, not in nominal terms because since he spoke on 25th March, the cedi has continued to depreciate, reaching nearly GH¢13 to the dollar. Let us repeat right here that relying on funds from the IMF, World Bank, Eurobonds, cocoa syndicated loan, etc. to bolster the cedi, as we have been doing, is not only a lazy man’s approach. To say the least but also clearly unsustainable as the pressure would be back on when the loans fall due for repayment.”

“The way to stabilize the cedi on a durable basis is to increase our FX earnings through greater ownership of, and value addition to, our natural resources, to reduce our import demand through domestic industrialization and to entrench fiscal and monetary discipline,” quoted him to have said during the press briefing.


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