Economist, Dr. Sa-ad Iddrisu, has urged the government to take steps to address the cedi depreciation, as the cedi may hit Gh¢25 to $1 if urgency is not attached to addressing the situation.
Dr. Iddrisu made this call on Wednesday, October 19, 2022, during a zoom lecture on the state of the Ghanaian currency, with some Ghanaian students in the U.S.
According to Dr. Iddrisu, “On Monday Oct 17, Bloomberg classified the Ghanaian cedi as world’s worst performing currency. It has depreciated more than 45% this year. This is affecting businesses and traders in the country, and also affecting people’s savings.”
“In January 2022, if you had Gh¢150,000 in savings at the bank, it was equivalent to $25,000 with the exchange rate of around Gh¢6. By October 2022, it’s now equivalent to $12,000 with the exchange rate of around Gh¢12.5. Within the 9 months period, your savings would have lost its value by $13,000 (excluding current October inflation rate of 37.2%),” Dr. Iddrisu said.
He added that “Things may even get worse by the end of the year into early next year. Analyzing exchange rates data from Bank of Ghana, there is the likelihood that the cedi may hit Gh¢25 to $1 by early next year, if government does not take immediate steps to address the situation.
Dr. Iddrisu added that, “the IMF loan facility of $3 billion over the next three years may help pump in some extra dollars into the economy and halt the drastic cedi depreciation. However, there is no certainty that the first tranche of the loan payment would come in anytime soon.
Thus, government would have to think of immediate solutions to address the currency depreciation situation, whilst waiting on the IMF loans.”
Dr. Iddrisu went further to suggest three immediate solutions the government can adopt to address the fall cedi, “For short term measures, the government should halt all profit repatriations by foreign companies in the country from now until July next year, secondly, halt businesses and academic institutions from charging in dollars, and finally regulate the “Hausa-Abokis” in the local markets who are engaged in currency exchange.
These three short term measures would help reduce the high demand for the dollar in the Ghanaian economy and help in stabilizing the cedi”
Dr. Sa-ad Iddrisu is a Ghanaian-born economist based in the United States of America. He has over the years been extremely vocal on the state of the Ghanaian economy and has made several policy recommendations in the past.
By: Dr. Sa-ad Iddrisu