President Nana Addo Dankwa Akufo-Addo has said measures taken by the government to restore Ghana’s forex markets have begun to see some calm returning and will not relent until an order is completely restored.
Ghana is facing a challenging economic crisis which has seen the country’s currency, the Cedi, over the last three weeks, fall nearly 20 per cent against the dollar.
An anonymous two-minute audio message on a WhatsApp platform predicting a so-called haircut on Government bonds sent Ghanaians and investors into banks and forex bureaus to exchange the Cedi for the US dollar, which saw the Ghanaian currency depreciate further.
The rapid depreciation of the Cedi, together with the supply shortfalls has largely culminated in an unprecedented high inflation rate, which is 32.7% as of September, this year.
In his address to the nation on measures taken to address the catastrophic economic situation confronting Ghanaians, President Akufo-Addo said the Bank of Ghana had recently enhanced its supervisory role in the forex bureau markets and the black market to flush out illegal operators, as well as ensured that those permitted to operate legally abide by the market rules.
He said the recent turbulence in the financial markets was caused by low inflows of foreign exchange and was made worse in the last two to three weeks, in particular, by the activities of speculators and the Black Market.
“Let us keep our Cedi as the good store of value it is. To those who make it a habit of publishing falsehoods, which result in panic in the system, I say to them that the relevant state agencies will act against such persons.”
Already, the BoG has revoked the licenses of some forex bureaus and this exercise will continue until complete order is restored in the sector.
More importantly, fresh inflows of US dollars are providing liquidity to the foreign exchange market and addressing the pipeline demand.
According to President Akufo-Addo, the Bank of Ghana had given its commitment to commercial banks to provide liquidity to ensure the economy continues to stabilise until the IMF programme kicked in and the financing assurances expected from other partners also come in.
The government, the President stated, was working with the Bank of Ghana and the oil-producing and mining companies to introduce a new legal and regulatory framework to ensure that all foreign exchange earned from operations in Ghana is, initially, paid to banks domiciled in Ghana to help boost the domestic foreign exchange market.
Again, the Bank of Ghana has begun to enhance its gold purchase programme.
All of these, President Akufo-Addo said, are immediate measures designed to change the structure of Ghana’s balance of payment flows, and sanitise the foreign exchange market to ensure that the banks and forex bureaus operate along international best practices.
Together with strengthened supervision, the President said he was confident that those measures would go a long way to sanitise the country’s foreign exchange market and make it more resilient against external vulnerabilities going forward.
The African Development Bank (AfDB) had said that 60% of the country’s iron ore and steel comes from Ukraine. 50% of floor, 30% of wheat and 39% of fertiliser come from Russia.
That, President Akufo-Addo said, dependent on all of these imports as a country and budding economy to be able to survive would not materialise unless the structural weaknesses of the economy were addressed.
The President said the success of Ghana’s efforts at diversifying the structure of its economy from an import-based one to a value-added exporting one was what would, in the long term, help strengthen the economy.
The government, President Akufo-Addo noted, had made some progress with the 1D1F but the country’s current situation required that the government took some more stringent measures to discourage the importation of goods that can be produced here.
He said the government would review the standards required for imports into the country, prioritise the imports, as well as review the management of the country’s foreign exchange reserves, in relation to imports of products—rice, poultry, vegetable oil, toothpicks, pasta, fruit juice, bottled water and ceramic tiles, and intensify government’s support and the banking sector, to manufactured and produced those products in sufficient quantities locally.
The government will, in May 2023, review the situation. “We must, as a matter of urgent national security, reduce our dependence on imported goods, and enhance our self-reliance, as demanded by our overarching goal of creating a Ghana Beyond Aid.”
President Akufo-Addo expressed the government’s determination to restore stability to the economy, and provide relief to Ghanaians. “We are all in this together, and I am asking for your support to rescue Ghana from the throes of this economic crisis.”
Rex Mainoo Yeboah, ISD
