Dr. Mahamudu Bawumia, Vice President of Republic of Ghana, has lauded the government’s achievement in managing the cedi.
According to him, the cedi has recorded its lowest depreciation since the fourth Republic under President Akuffo-Addo’s regime.
“Between 1993 and 1996 the exchange rate of the cedi against the dollar depreciated by an average of 27.9%. Between 1997 and 2000 the depreciation was 25%. From 2001 to 2004 it was 11%. During 2009 and 2012 it was 10.1%. Between 2013 and 2016 18%. And from 2017 to 2019 the depreciation of the cedi has come down from the 18% to 7.3%. And that is quite remarkable and making it the lowest depreciation of the cedi in the Fourth Republic.”
Dr. Mahamudu Bawumia
The Vice President made these remarks during the 11th Quadrennial Delegates Conference of the Industrial and Commercial Workers Union (ICU) on Thursday, August 26, 2021. Dr. Bawumia averred that Ghana has a flexible exchange rate regime under President Akuffo-Addo’s regime.
“We don’t operate in Ghana a fixed exchange rate regime; we have a flexible exchange rate regime which means the exchange rate will go up and down for us in maintaining this flexible exchange rate regime. The challenge for the management of economic policy, is making sure that you maintain relative stability and you don’t have an accelerated depreciation of the exchange rate that we have seen many years past.”
Dr. Mahamudu Bawumia
Dr. Mahamudu Bawumia further noted that his government has made efforts to maintain the recent stability in the cedi for the country’s economic recovery.
“We have also focused on stabilizing the cedi. The value of the cedi is very important and its stability is also very key for economic development and the welfare of businesses and individuals.”
Dr. Mahamudu Bawumia
Also, the Vice President revealed that during the heightened pandemic period, the government implemented measures to support the economy.
That notwithstanding, Dr. Mahamudu described Ghana’s economy as one that depends highly on imports. He further explained that when the cedi depreciates, it translates into the prices of goods and services, especially petroleum.
Banking sector clean up
Speaking on the government’s decision to mop up the banking sector, Dr. Bawumia explained that it was painful but necessary.
He further revealed that the country’s financial system at the time, per data from Ghana, was on the edge of collapsing absolutely. A situation he described as scary.
Still commenting on the clean-up, the Vice President averred that the symptoms were already observed in some savings and loans companies because some were not paying the depositors.
He likened the situation to a cancer in the throat that needed to be cut off to curb further spread of the cancerous cells.
“We had a situation where you had cancer and it is in your throat and if you don’t cut it off, it’s gonna spread and we had to cut it off,”
Dr. Mahamudu Bawumia
According to Dr. Mahamudu Bawumia, the government recognized the problem and took courageous steps to handle it.
He emphasized that, “government is not elected to make the easy decisions and it is the hard decisions that often distinguishes a good government from a not so good government.”
The Vice President further opined that the measures taken protected the investments of 4.6 million depositors.
“In the end, we saved the banking system and the bigger financial system and safeguarded the hard-earned lifetime investments of 4.6 million depositors many of whom are workers. We would have had a collapse and this economy would not have recovered that easily, if everybody lost their savings in the bank.”
Dr. Mahamudu Bawumia
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