The Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye, has called on the government to consider methods of acquiring full ownership of Ghana’s natural resources to utilise them to back the Cedi to fortify its value.
Dr. Kwakye emphasised that employing resources such as gold to support the Cedi could elevate it to become one of the most robust trading currencies globally, especially as the government grapples with finding solutions to address the currency’s devaluation.
Numerous trade unions and associations have voiced concerns regarding the depreciation of the Cedi, lamenting its adverse effects on their businesses.
Currently, a dollar is selling at GH¢14.90 on the forex market, which is significantly up from the GH¢10.97 it was sold for the same period in May 2023.
Bloomberg reports that the Cedi’s depreciation is being exacerbated by a decline in cocoa earnings as exports fell by about $500 million in January and February 2024 due to poor weather conditions and the swollen shoot disease.
Speaking on the Citi Breakfast Show on Wednesday, Dr. Kwakye told the host Bernard Avle, that relying on external support to strengthen the Cedi and the economy has never been a sustainable measure because the shortfalls always abound and are often negative.
The underlying fundamental structure of the economy hasn’t changed and I have always said that relying on external loans to support your currency is not sustainable because you will eventually have to pay back and when you begin paying back, there will be outflows and so it looks like we are now just waiting for the IMF’s $360 million to be stronger for a while and return to our struggling state.
“The Cedi is vulnerable and we can only stop the fall temporarily and the depreciation will resume again.”
Your reserves support your currency and so our national reserves support the Cedi and so wherever your reserves are coming from, for example, in gold, what we need to understand is that we need to own our own reserves of gold and we need to take ownership and increase the reserves.
“If we take ownership of our resources, we can use them to back our currency to strengthen it,” the economist added.