Gov’t blamed for cedi depreciation

Professor Augustine Fosu of the Institute of Statistics, Social and Economic Research (ISSER) of the University of Ghana, Legon, has attributed the depreciation of the cedi to “unnecessary” government spending.

He said the country’s huge external current account deficit was also a contributing factor, stating that “we are not exporting as much as we should.”

Prof. Fosu, in an interview with BUSINESS GUIDE, warned government to be cautious with spending in order to save the cedi and reduce inflation.

“I think government is spending unnecessarily on certain items. That is where the discipline ought to be. If it continues spending, the cedi will continue to depreciate and inflation will go high.”

Prof. Fosu urged government to create the conducive business environment to support export.

He said Government should stop blaming Ghanaian businesses for the increase in import, stating that “it must focus on ensuring that we have the appropriate infrastructure to reduce the bottlenecks so that we can increase export.”

Prof. Fosu also advised Government not to import many expensive items.

He told BUSINESS GUIDE that the recent measures introduced by the Central Bank actually reduce people’s confidence in bringing in the foreign exchange and holding cedi.

Prof. Fosu said “there are fewer propensities to bring in foreign exchange because of the measures. This has diminished foreign exchange.

“Until something is done about the measures, future supply of foreign exchange would decline,” he said.