Finance Minister Ken Ofori-Atta, according to Johns Hopkins University professor of applied economics Steve Hanke, has lost touch with reality on the performance of the Cedi.
On September 29, he said in a tweet that Ofori-Atta was “dreaming” to believe that the Bank of Ghana’s efforts to ensure the Cedi regains its value were “paying off.”
“#Ghana’s Finance Minister Ken Ofori-Atta says the Bank of Ghana’s efforts to contain #cedi depreciation are “paying off.” SPOILER ALERT: Ofori-Atta must be dreaming. Since Jan. 2020, the cedi has depreciated ∼40% against the USD,” Prof Hanke tweeted.
The economist behind the “Troubled Currencies” initiative has continually written down the local currency as “junk currency” issued by the central bank, arguing that installing a currency board was the only way to stop its devaluation.
In recent months, the Cedi has been falling precipitously versus important trading currencies like the US dollar.
At one point, several currency offices offered GH 10 for a dollar. The Bank of Ghana has been attempting to control the problem by frequently raising the monetary policy rate.
At a briefing on September 28, the Finance Minister described other steps the central bank was taking to calm the market, such as a Special Foreign Exchange Auction for Bulk Distribution Companies and a Gold Purchase Program.
“As part of measures to shore up our reserves, improve exchange rate stability and address some of the funding needs, the Ministry successfully worked on a US$750 million Afreximbank loan facility which was received in August 2022,” he explained.
“The traditional Cocoa Syndication Loan, expected in the last quarter of 2022 which will promote the cocoa sector, will further help us build our FX reserves and provide a strong buffer for the cedi in the last quarter of the year,” Ken Ofori-Atta added.
For instance, the cedi’s value against the US dollar fell by more than 20% as of July this year.
Additionally, the investor community as a whole has been harmed by recent economic downgrades by international rating agencies like Fitch and Standards & Poors, while Ghana waits for an International Monetary Fund, IMF, support programme that is anticipated to be available in 2023.
#Ghana‘s Finance Minister Ken Ofori-Atta says the Bank of Ghana’s efforts to contain #cedi depreciation are “paying off.” SPOILER ALERT: Ofori-Atta must be dreaming. Since Jan. 2020, the cedi has depreciated ∼40% against the USD.https://t.co/QK93tOONpJ
— Steve Hanke (@steve_hanke) September 29, 2022
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