The Deputy Minority Leader, James Avedzi, has blamed the depreciation of the Ghana cedi on weak fundamentals, following its recent depreciation against the dollar.
According to him, the depreciation is as a result of the government’s inability to manage the economy very well.
Speaking to Accra based Citi Fm, the Ketu North MP, predicted the further fall of the cedi if pragmatic measures are not taken to control the rapid depreciation of the cedi.
“The cedi has depreciated from January 2017 to date by over 26 percent. The fundamentals of the economy are still weak and that is why the cedi is still depreciating. We thought that they would have arrested the cedi and for that matter the value of the cedi will not fall.” He said.
He however, stated that government`s borrowing for last year were all done in foreign currency, hence the depreciation the currency is facing now.
“The cedi has depreciated over 26% simply because the whole of last year, the borrowing they did was done in foreign currency in the dollar terms.” he added.
According to him, the solution for government is to “what they have to do is to go and borrow more, but that also tells you that the debt to GDP ratio will be changing so you will not have the fiscal space to borrow more and for that matter they will not be able to borrow to shore up the supply of the dollar so the pressure will continue to be on the cedi especially when it gets to November where demand will be higher for purchase of Christmas items. The pressure will be more on the cedi and the cedi will fall further.”
By: Alex Semordzi