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Business News of Tuesday, 19 March 2019

Source: citibusinessnews.com

Planned IMF exit causing investors to hold back funds as cedi suffers

Economist and consultant Dr. John Kwakye has stated that Ghana’s planned exit from the International Monetary Fund (IMF) programme next month has created uncertainties among some investors, contributing to the fall of the cedi against the dollar.

According to him, some investors who are willing to bring their funds into the country are unsure of how events will turnout in the country after an Extended Credit Facility programme with the IMF ends in April.

He argued that this has made some investors hold back their funds, anticipating how managers of the country will manage the economy in a post-IMF regime.

“Investors are thinking of how we will be able to manage the economy when the IMF is gone,” he said, adding that “the investors are getting it wrong, I don’t see why they are thinking that way, we cannot have the IMF with us forever. We should be able to graduate”

Dr. Kwakye who was speaking on Citi TV’s Point of View programme was of the view that the recent fall in the cedi against the dollar could be attributed to short term shocks.

He added that the cedi’s depreciation is due to weak structural fundamentals in the country.

Providing more details to support his argument, Dr. Kwakye stated that even though the economic fundamentals show good indicators with growth and inflation all pointing in the right directions, the structural fundamentals which is designed to support production is weak.

The cedi has seen over 12 percent depreciation this year.

“We are an import driven economy and that is the fundamental challenge,” he stressed.

Meanwhile, a Former Director of the National Development Planning Commission, Dr. Nii Moi Thompson stated that taxes on trade-related activities also serve as a disincentive to export.

The cedi has seen over 12 percent depreciation this year.