Finance Minister, Ken Ofori-Atta, has underscored the need for all to support Government’s drive for import substitution as that could lead to the stabilization of the cedi.
Ken Ofori-Atta indicated that this is the time for Ghanaians to advance reforms and unleash local production capabilities becasue the country can no longer continue to import goods from other countries, and the Ministry would continue to work with relevant regulatory authorities to reverse the trend.
The Minister noted that the challenges the nation is currently facing are daunting and that “the exigencies of the moment have forced us to turn this crisis into an opportunity to resolve our short-term challenges and the long-term structural problems that have inhibited our economic transformation”.
Mr. Ofori-Atta reiterated the President’s call for a reduction in over dependence on imported goods and to “enhance our self-reliance”.
“Clearly, the time has come for us to put in place the foundations that would allow our Industry to be the backbone of our resilience and structural transformation.”
Ken Ofori-Atta
Giving statistics to buttress his claim for a shift from importation to local production, he disclosed that between 2017 and 2020, Government spent as much as GHS 6.874 billion on the importation of rice, GHS 3.993 billion on fish, GHS 1.881 billion on Chicken (processed), GHS 487 million on meat, GHS 281 million on vegetables and an estimated GHS 184 million on Poultry.
Mr. Ofori-Atta reaffirmed the government’s commitment to assisting local industries in producing more import substitute products such as rice, poultry, vegetable oil, toothpicks, pasta, fruit juice, bottled water, ceramic tiles, and others.
He also commended the Association of Ghana Industries (AGI) for the continuous support of policies and initiatives that supported the local industries.
Government committed to stabilizing cedi
Finance Minister further reiterated government’s commitment to stabilizing the Ghana cedi by the end of the year.
According to him, government together with the Bank of Ghana, has adopted measures including dealing with speculation which he described as one of the major causes of the depreciation of the cedi in recent times.
Mr Ofori-Atta noted that though the depreciation of the cedi has impacted the cost of doing business in the country, he is confident the rate of depreciation of the local currency will slow down and bring relief to businesses.
“As the Minister of Finance, no one needs to tell me the ravages of the cedi depreciation which has become an albatross on the neck of our local industries and the high cost of living for all citizens”.
Ken Ofori-Atta
Mr Ofori-Atta also pointed out that the dollar had strengthened against the other major foreign currencies, leading to the depreciation of the Yen, Pound and the Euro.
He charged industry to increase their productive capacity to stimulate job creation, adding that “we cannot continue to be a nation of importers.”
The Ghana cedi has depreciated markedly this year against the major currencies such as the dollar, pound and Euro.
The depreciation this year is quite unusual when compared to the year 2021 when the cedi depreciated against the dollar and pound by 4.1% and 3.8% respectively, but appreciated against the Euro by 3.5%.
The significant fall in the cedi so far this year has been the highest in over 22 years. Indeed, by the end of December 2007, the cedi exchange rate against US$1 was GHS0.96 and this has since depreciated to GHS13.04, equivalent to $1 (as at November 8, 2022).
Aside the usual structural bottlenecks of being an import-dependent economy that exports mainly primary products since independence, the current depreciation being experienced has been driven mainly by both domestic and external factors.
These factors include: unsustainable debt stock and debt servicing cost, failure of the government to assure investors of pursuing a credible fiscal consolidation as indicated in the 2022 budget and subsequent downgrade by major rating institutions, COVID-19 as well as the Russia-Ukraine war.
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