Gifty Annor-Sika Asantewah, forex market expert and the President of Women in Forex Ghana, has downplayed Ghana’s latest move to ban and stop granting forex cover to the importation of some category of used products into the country in a bid to bring depreciation of the cedi under control.
However, the Women in Forex Ghana President, in an exclusive interview with the Vaultz News noted that such a move is counter productive and will not Stem out FX outflow.
“The move is counter productive just like the earlier directive towards last year where the bank of Ghana decided to stop forex support to some selected good. The fact is the latest directive will not stem out forex outflow.
“It will only encourage more black market transactions and it will rather invite more pressure on the FX market simply because the black market will be booming. Many of these foreign currency retailers will hoard a lot of these currencies for the black market transactions, inviting more pressure on the cedi. So, to me, I think this kind of tactics or whatever you may call it will not stem out forex outflow as there are more alternative means of getting the foreign exchange.”
Gifty Annor-Sika Asantewah
Ms Gifty Annor-Sika wondered who is advising the government while stressing that the latest decision is distasteful and will only make a section of Ghanaians poorer.
“Many Ghanaians can’t afford the brand new kind of the products because they are expensive. Therefore, if we try to stop the importation of these used products just because we feel it is taking huge chunk of our forex, then we are not being fair to the middle and lower class who patrionise these products.
“It’s about time the government found lasting solution to the systemic depreciation of the cedi which has become a serious problem in the recent times, rather than randomly banning some category of products consumed by Ghanaians. Sometimes I wonder who is advising the government because the very things we are stopping to import are the things that we cannot produce and are generally expensive in their new form.”
Gifty Annor-Sika Asantewah
Import-Dependent Economy
Ms Gifty Annor-Sika explained that Ghana is an import-dependent economy and because of this, the country continues to buy foreign currency to meet its import demands, with less supply of foreign exchange from its exports. “Sometimes, the country records a net gain with exports earnings exceeding import costs, but these are paper gains”.
The Forex Market Analyst was reacting to the decision of the government to withdraw forex support for the importation of some used products towards the final lap of last week and effectively banning their importation. Some of these products are air conditioners, computers, fans, microwave oven, television set, refrigerators and many others.
Meanwhile, just recently, the government made a similar call by withdrawing forex support for some selected goods in the country. Some of the items include rice, vegetable oil, toothpicks, pasta, fruit juice, bottled water, ceramics and tiles.
However, the Managers of Ghana’s economy admitted the country does not have enough foreign exchange reserves, with import cover currently lasting only a month and a half, a revelation which tells the precarious state of decline the country has found itself in.
Ghana, which is battling its worst economic crisis in decades, announced a debt standstill so money used to service foreign debt will not go out anymore and take pressure off the foreign exchange market.
Already, the country’s hopes for a quick domestic debt restructuring has suffered major setbacks as creditors have been slow in responding to persuasion from the Ministry of Finance to exchange their current bonds for new, significantly lower value, versions.
Ghana’s Central Bank for the first time embarked on a domestic gold purchase programme to help shore up the country’s foreign reserves.
In November 2022, Vice President Mahamudu Bawumia also announced that Ghana has concluded talks for the operationalisation of a Gold-for-Oil policy, another measure to retain foreign exchange to bolster the Ghana cedi. However, its gains are yet to materialize after it commenced fully this year 2023
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