By Classfmonline.com on 2019-03-05 09:13:15
With the president finally stating publicly that he is “upset” over the rapidly depreciating cedi, and the implications for the economy, perhaps it’s time for him to call a national economic forum to seek ideas on how best to rescue the situation before it gets worse...
With the president finally stating publicly that he is “upset” over the rapidly depreciating cedi, and the implications for the economy, perhaps it’s time for him to call a national economic forum to seek ideas on how best to rescue the situation before it gets worse. By now, it should be clear to any Ghanaian that no single government(or president) has all the solutions to Ghana’s seemingly intractable economic problems, and that if we can’t have coalition governments – the ideal form of governance for a developing country like Ghana that would harness the best ideas from all political parties for national development– then the least we can do in times like this is to set aside our narrow political differences and rally around common solutions to our common problems.
In 2014, as the cedi took a tumble and the economy crumbled, the government came to this inescapable realization and proposed a national economic forum. The leading opposition party boycotted that forum, and the cedi went on to lose about 33.0% of its value against the dollar, wiping out US$10 billion from nominal GDP in 2014. All the cacophony and theatrics of prayers to raise the cedi at the time amounted to nothing (as expected), and it took good policies, some from the economic forum, to reverse the crisis and set the economy on the path to recovery. By 2016, the depreciation had slowed to just under 4.0%.
Five years after the economic forum, the opposition party is now in power and finds itself in the same quicksand of the currency markets as its predecessor did in 2014. Between the end of December 2018 and the end of February 2019, the cedi lost a whopping 13.15% of its value against the US dollar, the largest year-to-date depreciation since 2014, when the cedi lost 12.81%. For the same two-month period in 2018, the depreciation was only 0.07%. The year-on-year depreciation (February 2019 vs. February 2018) was 20.38%, the highest rate since 2015, the peak of the economic recession when it was 27.38%. For the same year-on-year in February 2018, the cedi actually appreciated by 1.36% against the dollar. (See table).
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