Cedi fall had its positives – BoG Dep Governor

Deputy Governor of the Bank of Ghana, Millison Narh, has said though the depreciation of the Cedi adversely affected the economy this year, it also brought along some good fortune.

“Let me say that depreciation of the currency is not necessarily a bad thing. If you recall, government increased cocoa prices by 62 percent. The question is could Government have done this without the depreciation of the currency?”

Narh asserted that the depreciation of the Cedi in the first quarter of 2014 helped the nation to close its trade gaps, something he sees as a positive development for the Ghanaian Economy.

“…As far as exports are concerned, depreciation of the currency encourages export, but on the other hand, it is a double-edged tool: it discourages import and as we speak, imports have decreased by 17.8 percent and it has helped us to close the trade gap.”

The Cedi, for the first three-quarters of this year, depreciated by about 40 percent to the Dollar and 25 percent against the Euro, but saw a marginal stability in the last quarter.

Mr. Naah, who was speaking at the 2015 post-budget review organised by Price Waterhouse Coopers (pwc) said the depreciation margin of the local currency to the other currencies is what must be the source of worry.

However, former Minister of Works and Housing, Hackman Owusu Agyeman, who was at the same programme disagreed.

The former Legislator told STARR BUSINESS' Osei Owusu Amankwaah in a later interview that the analysis done by the Deputy Central Bank Governor was untenable.

“You cannot say that the depreciation of the Cedi is good for the economy or a country because that led to an increase in the prices of cocoa. You have to look at it within an overall holistic concept as to what the impact of that particular devaluation is; how did it come about and whether it’s due to fiscal indiscipline or monetary indiscipline.”