Ghana’s Vice President, Kwesi Amissah-Arthur, has assured citizens that the current monetary policy reforms going on in the country will help to restore policy credibility and stability in the economy.
Although Ghana is seen as one of Africa’s strongest economies with a sustained economic growth of over 7 percent, however its currency, Cedis, is sub-Saharan Africa’s second-worst performing currency, after Mozambique this year. The currency dropped 5.8 percent this year, after sliding 20 percent in 2013.
To stabilize the ailing currency, the Bank of Ghana raised interest rates by two percent to 18 percent early this month, a day after it set limits on foreign-exchange transactions and ordered all local transactions to be done in the Cedis.
The present reform, according to the VP, will favour the country’s economic plight and restore it back to the progressive track it earlier threaded.
The reforms will go a long way in restoring legal requirements for doing business and reduce the “dollarisation” of its economy, as well as help local and foreign investors create a competitive environment that guarantees adequate returns on investment, Amissah Arthur noted.
Speaking at the fourth annual African AmCham (American Chamber of Commerce) Summit in Accra, the VP explained that the fall has put pressure on the country’s foreign reserves and contributed to the rapid slide of the Cedis in the past year.
Ghana lost $1.3billion in potential export revenue last year due to price declines of gold and cocoa, cumulatively falling by 20 percent and 25 percent respectively since 2011.
The apex bank also reported that the Cedis lost 7.8 percent in January alone against the dollar, preceded by a 14.6 percent slump in 2013.
The US slowdown in bond purchases is seen as the trigger of this decline, as it fuelled currency volatility in emerging economies and threatened Ghana with higher cost of debt servicing.
Local businesses are beginning to feel the brunt following the heightened prices of imported goods on the local market, which is slowing business activities, as local producers find it cumbersome to procure raw materials, while consumers are battling with lower purchasing power.
