Professor of Economics at the Institute of Statistical, Social and Economic Research (ISSER), Peter Quartey, has described as a move in the right direction, the decision by the Bank of Ghana to use six hundred and seventy million dollars ($670,000,000) to stabilize the cedi.
The Governor of the Bank of Ghana, Dr Ernest Addison revealed that the amount was used between 2017 and 2018 to strengthen the cedi’s value against other international currencies.
The cedi has depreciated by 11 percent between January last year and the same period this year.
In an interview with Citi Business News , Professor Quartey lauded the move and said the decision by the BoG saved the cedi from experiencing further depreciation against the dollar and other international currencies during the periods of 2017 and 2018.
“The Central Bank in its wisdom will look at the demand and the supply for foreign currency and then it will intervene as and when the need arises by doing sometimes what they refer to as the management of the system although it’s a floating rate system sometimes they have to intervene when you think the fundamentals are not right or sense something is going against the exchange rate because there is excess demand over supply”, he stated.
He added, “Now if you don’t intervene it can have severe repercussions on the private sector. Import duties will go up, cost of production and cost of living will go up so the Central Bank has to intervene as and when the need arises”.
He however urged the country’s economic management team to put in place long term measures to deal with the depreciation of the cedi.
“These are temporary measures, they are not long term solutions, the long term solutions will be for us to grow the real sector if we produce a lot of the things that we consume, we don’t have to demand foreign exchange and that for me will solve the problem”.
Profesor Quartey advised the economic management team to do more to reduce imports to the country.
“So, the managers of the economy will have to ensure that we grow the real sectors of the economy, that is more sustainable than temporary interventions as and when the need arises .It is done it is needful but the long term intervention will be to grow the real sector”.