Businesses worried over cedi depreciation

Adnan Adams Mohammed

Businesses are worried as they predict severe crisis in the private sector if the government does not immediately put measures in place to deal with the fall of the Ghana cedi against major international trading currencies.

The local currency, Ghana cedi, is experiencing a dwindling value against the US dollar.

It is estimated that, the local currency has depreciated in value by 3 to 4 percent this year.  This has added to the cause of high cost of doing business in the country.

President of Ghana Chamber of Commerce and Industry, Nana Dr Appiagyei Dankawoso I, has therefore called on government through the regulator must intervene with some measures to absorb the shock of this trend.

He said, “Most of our trading and investments as a chamber hovers around the strength of the cedi. Anytime there is a fall, businesses become so much worried.

“It is the final consumer that suffers and it also affects the general economy of the country. There should be some level of interim measures. There must be some absorbers that have to be taken as a measure to make sure that at least the cedi is stabilized,” he said.

Between May and June this year, the local currency has experienced a 0.7 per cent depreciation and now sells at GHS4.44 to US$1.

This has generated a debate among concerned parties to the economy.

While, the government has maintained that, it has put in place robust measures to halt the free fall of the cedi in the coming weeks.

As said by Dr. Gideon Boako, Spokesperson for the Vice President, Dr. Mahamudu Bawumia, efforts to reduce inflation and increase the availability of foreign reserves, point to a foreseeable halt in the depreciation of the cedi against major currencies like the dollar.

Dr. Boako stressed that the situation would be reversed soon.

“Because of the strong fundamentals that we have built which are serving as shock absorbers, when the shock comes; either it is spillover from the global economy or indigenous shock, we have built stronger fundamentals, that will anchor the currency and therefore the magnitude of depreciation,” he said.

However, a member of Parliament’s Finance Committee and MP for Bolgatanga Central, Isaac Adongo cast doubts over the government’s ability to sustain the cedi’s strength.

“If the economy is doing so well and you have a bigger base, let’s look at your revenue that you (NPP) generated from that base in the first quarter of the year. When you inherited the economy in 2017 that you said it was worse, the worse economy delivered tax revenue, domestic revenue in the first quarter of 1.6 billion in January, 2.9 billion in February and 4.4 billion in March,” he said.

Also,  the Executive Director of the Africa Centre for Energy Policy (ACEP), Ben Boakye has intimated that, petroleum prices at the pumps will not experience any significant drop in the coming weeks, even though crude oil price continues to drop on the international market.

According to him, a continuous depreciation of the Ghanaian cedi against the dollar will leave prices at the pumps unchanged.