Business News of Thursday, 28 March 2019
The Ranking Member on Parliament’s Finance Committee, Ato Forson is against government’s call for a bipartisan probe into the annual depreciation of the cedi.
While hailing government’s success in rescuing the fast-running cedi against its major trading currency, the dollar, the Finance Minister, Ken Ofori-Atta during a presentation in Parliament Thursday, bemoaned the consistent depreciation the local currency.
This happens every year and government, especially the President Nana Akufo-Addo regime wants to find a lasting solution to the problem.
He has tasked the Finance Minister to find this and fast. Mr. Ofori-Atta disclosed during his presentation that a bi-partisan committee will be set to do just that.
He said, “the president has directed that I investigate the structural causes for the depreciation of the cedi and to propose measures to address the situation.
“The governor and I will put a bipartisan committee together to proceed immediately,” he said.
But Mr Forson, who is a former Deputy Finance Minister says that approach is completely needless.
He told Joy News’ Evans Mensah on Top Story that although the Minority are prepared to offer their competence when called on, the move is “a waste of time and resources.”
For him, it will be a surprise for government or anyone to say they do not know the causes of the depreciating cedi, so much so that a committee would have to be set to find that out.
“What we are seeing is only the symptom, not the disease. We know what the disease is and in fact, anyone else in this country knows what is causing the depreciation of the cedi,” he said.
The Ajumako-Anyan-Asiam MP said the two major problems facing the country which is leading to the persistent depreciation of the cedi are a lack of investment in the right sectors of the economy and excessive borrowing.
“We are not investing heavily in areas of agriculture, areas that we cannot easily import but we are rather investing so much in consumption.
“Again we are borrowing too much. Foreign participation in our country is so much that all the forex that we end up collecting, a chunk of them end up being used in servicing loans. The amount of money we use in serving our debt is itself is a problem for us as a country,” he added.
He does not think the committee is a solution to the problem and that “the statement itself is not well thought through…it will not solve the problem.”
But Chairman of Finance Committee Dr. Mark Assibey Yeboah disagrees with his colleague.
He said the bipartisan committee should not be seen as the only solution to the problem but one of many.
In his view, a currency cannot depreciate so much in a week and appreciate so much in another. It does not mean the fundamentals are weak, as the Vice President Dr Mahamadu BAwumia once said, it only means something is wrong.
“When a currency appreciates as it did last week in a matter of a week, that defies economic theories. A currency that had been depreciating so fast…we shouldn’t be seeing these swings. That is volatility, the fluctuation, it is not normal.
“So there must be something that we have not averted our minds to in the past and I think this is time for us to look to the data and really understand the happenings of the economy all over again,” he said.