Dr. Ernest Addison, the Governor of the central bank of Ghana has expressed confidence in the cedi not going back to its worst days despite the fact that the dollar has begun gaining grounds against the cedi again.
According to Dr. Addison, the poor performance of the currency as witnessed in the previous year, 2022 will not repeat itself. This, the governor said can be made possible if the debt exchange programme is successful.
“Government has announced a debt stand still and that debt standstill means that the outflows – the money used to service foreign debt will not go out anymore. That gives us a lot of room and takes pressure off the foreign exchange market.
“So because of that debt standstill, I can say that we should expect the currency to remain relatively stable. I can stick my neck out that, we will not see the sort of things we saw in 2022 if everything works well.”
Dr. Addison
Dr Addison however admitted to the parliamentary public accounts committee that the country has insufficient foreign reserves, with import coverage lasting only about a month and a half.
“It depends on what transactions have taken place that week. Maybe there have been payments to contractors. Typically, those types of payments can move the exchange rate immediately and convert that into the foreign exchange – it could be payment for energy or for the energy sector.
“A lot of payments are outflows and have impact on the foreign exchange market. So the exchange rate really reflects a lot about the day to day pressures of the economy.”
Dr. Addison
Currently prevalent in the Ghanaian economy however is the steady rise of the dollar over the cedi, stimulating fear and panic among the citizenry – making them think that the country is headed back for the dark days of 2022 when the cedi devalued.
The Bank of Ghana has today, January 17, 2023 quoted the exchange rate to be GH¢10.30 to the dollar whereas in the commercial setting, the rate is slightly higher, with some quoting GH¢12.50.
Despite the situation, Dr. Addison is confident the worst days of the cedi are over.
BoG Is More Than Able To Sustain The Gold-for-oil Deal
In a related development, the bank displayed confidence in its ability to sustain the Gold-for-Oil deal.
By the central bank’s report, the country has sufficient quantity of gold reserves to sustain the policy.
Stephen Opata, the Director of Financial Market at the Bank of Ghana, made this assertion when he appeared before the Public Accounts Committee (PAC) yesterday, Monday, January 16, 2023.
The Director stated that there was no need for worry as according to him, the central bank has all it takes to fulfill the requirement of 160,000 ounces of gold each month under the agreement.
“As for the quantities, based on the production numbers we saw last year, gold has picked up. We believe that we can buy enough gold to sustain the program.
“I must say that the numbers we are currently looking at is about 160,000 ounces per month and that will represent about 50 to 60 per cent of the consumption of the country. According to what PMMC indicates, I think we have volumes to support the programme.”
Stephen Opata
The first consignment of oil under the policy landed at the Tema Port on Monday and constituted 40,000 metric tons of oil from the United Arab Emirates.
It was subsequently discharged to Bulk Oil Storage and Transportation (BOST), which will later formulate plans for its distribution and sale to the Oil Marketing Companies (OMCs).
Commenting on the arrival of the first consignment, the Governor of the Bank of Ghana said the development has reduced pressure on the foreign market.
“If this government-to-government arrangement works well, we will not be adding pressures to the exchange market.”
Dr. Addison
READ ALSO: Cocoa Farmers Threaten to Sue Al Jazeera, Denies Using Child Labour
