The Minister for Finance, Dr Mohammed Amin Adam, according to a story we have carried at our front page today, appealed to the business community to stop panic buying of the United States of America dollars and other foreign currencies. According to him, his plea is rooted in the fact that the mad rush to buy the dollar was causing the local currency, the Cedi, lose grounds.
According to him, the government was doing everything possible to bring in $2.32 billion from multiple sources before the year ends. He went ahead to mention these sources as disbursements from the IMF and World Bank, the Gold-for-Oil Programme, the Bank of Ghana’s (BoG) Gold for Reserves programme and proceeds from the Cocoa Syndicated Funds.
Addressing a news conference in Accra, over the weekend, Minister Amin Adam blamed the current exchange rate pressures on the strengthening of the US Dollar against major trading currencies, seasonal forex demand and other temporary factors, affirming that the government was implementing robust measures to ensure continued stability.
Whilst admitting the current challenges, he was hopeful about medium-term stability of the Cedi with a cumulative depreciation of 14.2% as of May 20, 2024 compared to 20.7% recorded in the same period in 2023.
“The positive results of the first and second reviews of the implementation of the IMF-supported Programme testify that we are achieving the Programme’s objective of restoring macro-economic stability and debt sustainability,” he said.
But as Ghanaians await the anticipated restoration of macro-economic stability, the Minister, in the opinion of The Chronicle, hit the nail right on the head when he stated that the Cedi was losing grounds because of the mad rush to buy the dollar. It is an undeniable fact that because of our inability to access the Eurobond market, the decline in both our cocoa production and export revenue, the inflow of the dollar onto our financial market has been limited.
This is what, in our view, has led to the continuous depreciation of the Cedi against major currencies such as the US Dollar and the British Pound Sterling. The setback notwithstanding, The Chronicle does not think the situation would have reached the current crisis point, if the industry players had not resorted to the panic buying of the ‘few’ dollars in the system.
Though no evidence has so far been adduced to prove this case, there are strong perceptions out there that business people deliberately buy the dollars and keep them in their homes. Though it makes business sense for one to invest in the dollar, the opposite is what we are all experiencing – the rapid depreciation of the Cedi.
As we put this editorial together, prices of goods and services, including that of petroleum products are moving up because the dollar has become a scarce commodity. Spare parts dealers at both Abossey Okai in Accra and Suame Magazine in Kumasi are complaining bitterly about the strength of the cedi, which is eroding the gains they have made.
Unfortunately, whilst the Central Bank has control over who should get the dollar, the same cannot be said about the forex bureaus and that of the black market. Those who want to hoard the dollar are aware of this and hence go to the forex bureaus to mop up the dollar in the system, and thus exacerbating the situation.
The Chronicle is, therefore, appealing to those behind the buying of the dollars not to import any goods but to keep them in their homes to stop the practice. As we noted earlier, the buying of the dollar is to safeguard their investments, but in our opinion, private interests should not supersede that of the state. This is the only country that we have so we must all put our shoulders to the wheel and help in the development of our motherland.
