The Bank of Ghana (BoG), according to Starrfm.com.gh report, is taking proactive steps to stabilise the cedi by building up its reserves, particularly as the festive season approaches and the demand for foreign exchange surges. Currently, the news portal continues, the cedi is trading at a rate of nearly GHS17 to a dollar on the foreign market, reflecting a significant year-to-date depreciation of 24.3%.
The Bank of Ghana’s strategy, according to the report, is to focus on bolstering confidence and assurance among businesses and consumers by piloting the local currency toward greater stability amidst the current economic pressures.
The news outlet also quoted the Governor of the Bank of Ghana, Dr Ernest Addison, as saying that boosting reserves was vital to minimizing fluctuations in the cedis value and safeguarding economic stability.
“Some are praying that the cedi will recover to GHS10.00 to a dollar. These are the problems in our economy, the issues about the exchange rate and financial sector issues. But I think the good news is that we are making progress because the developments we are seeing are not different from other jurisdictions.
“So, we need to stay focused and implement the appropriate policies and build buffers to be able to support the progress we have made,” Dr Addison was quoted as saying.
Looking at the rate in which goods and services are moving up in the country, due to the cedi-dollar volatility, the disclosure by the BoG governor that his outfit is building reserves to cushion the free fall of the local currency against the US dollar is welcome news. We need to call a spade a spade and not a big spoon – the cost of living in Ghana is very high.
Though official figures released by the Ghana Statistical Service indicate that consumer inflation has declined from as a high as 50.3% recorded in December 2022 to the current 25%, the reality on the ground does not reflect it.
Despite the inflow of the $3 billion International Monetary Fund cash, the economic situation in the country has still not normalised. Items that cost a consumer GHS100 today will be bought at GHS110 the next day. As we put this editorial together, fuel prices have gone up again and immediately this happens, it affects the prices of foods and other consumable items.
But can we blame the Oil Marketing Companies (OMCs) for the arbitrary increment in fuel prices? The answer, we dare say, is a big No! These OMCs rely on the US dollar to import the commodity into the country and since the cedi-dollar rate has shot up, it will definitely affect prices of fuel they import into the country as well.
Our concerns are that since the BoG is aware of the situation, one would have expected the apex bank to have put pragmatic measures in place to stop the free fall of the cedi as they are announcing now, but this never happened. If the BoG can build up its reserves as Dr Addison is now telling the world, why didn’t he put those measures in place, but sat down for the cedi to fall flat?
Much as we can blame the Russian-Ukraine war and the instability currently being experienced in the Middle East, the hub of world oil production, we, as a country, could have still done something to ameliorate the suffering of the people.
But as adage goes, better late than never – now that that the BoG has woken up from its ‘slumber’ and has decided to boost our reserves, we can only hope that better news comes out of it. With the Christmas holiday just around the corner, all eyes will be watching to see how the cedi will perform against the dollar. If the BoG will be able to deal with the situation as it is promising, it will be good news, but should they fail, then we are in for serious trouble, no doubt about that.
