Director of Business Operations at Dalex Finance, Joe Jackson, has revealed that the cedi depreciated because foreign investors lost confidence in the country.
According to him, government consistent borrowing has proven to all that it is incapable of paying its debts which has trickled down to the lack of confidence from foreign investors. He indicated that the 2023 Budget has failed to tackle the situation that got the country’s economy in the current predicament.
Mr Jackson noted that government should have used the opportunity of the budget statement to propose policy measures that would tackle the debt issue head-on to prevent further loss of investor confidence, which it failed to do.
“The cedi tanked because foreign investors lost confidence. And the foreign investors lost confidence because they could tell from our numbers that we’re unable to pay our debts. We’ve now confirmed, the Deputy Minister has confirmed if there was ever any doubt that we can’t pay. Borrowing 61 billion cedis is not what you do when you can’t pay. You take an axe to your expenditure.”
Joe Jackson
Mr Jackson explained that a good policy measure would have entailed the government making significant cuts to its expenditure budget. However, he stated that government is still engaging in its wasteful decisions while imposing austerity on the rest of Ghanaians.
The Dalex Finance Director of Business Operations indicated that key ministries capable of championing an economic recovery were not receiving funds while certain agencies whose usefulness in the government machinery have recently been questioned were being furnished with some amount of funds.
“I’ll be honest… I got what I thought was a reliable version of the tables and I started looking through, some of the numbers just don’t make sense to me. Why is there 80 billion still there for the Cathedral? Forgive me, I don’t know. Why is there a contingency vote of 1.4 billion?”
“The office of government machinery, I don’t care where you came from, why is it at 1.4billion? Guess what? Ministry of Food and Agric, do you know how much we’re giving them? 1.2billion. Do you know how much we’re spending on free SHS? 2.9billion. The Council of State is receiving more money than the Food and Agric Ministry.”.
Joe Jackson
Mr Jackson expressed the need to reassure Ghanaians and investors alike. He revealed that government must “carry the rest of the country with the austerity budget” it has to impose.
“We want to believe somebody is trying to bridge the trust gap between the government and the public. That can be done when you trim down and all of us feel that you’re taking the pain as much as we have to take the pain.”
Joe Jackson
Withdrawal of forex by government
On his part, former Chief Executive Officer of the Chamber of Bulk Oil Distributors, Senyo Hosi, highlighted that the government’s decision to withdraw foreign exchange support for rice imports is not a well thought-out policy.
He noted that although it might have been influenced by a good motive, the policy proposition is hasty and does not necessarily solve the problem it was intended to fix.
Mr Hosi explained that the withdrawal of FX support for rice importers will equally hit Ghanaians more than improve local production.
“So, you have this 57% that’s outstanding, that’s about a million tonnes of milled rice. Who is going to fill the gap? What policy structure do you have in place for us to fill the gap? Because for us to fill the gap, we need to cultivate four hundred and fifty something hectares. So, if you’re not going to do that it means that local production will not fill the gap, so what happens? We still will import.”
Senyo Hosi
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