Cedi Depreciation: Finance Minister Criticizes Dollarization Of Economy By Local Manufacturers
Ghana’s Minister of Finance, Dr. Mohammed Amin Adam, has voiced concern over the conduct of certain local manufacturing companies, accusing them of actions that contribute to the dollarization of the economy.
This practice, he warned, is exacerbating the instability of the Ghanaian cedi, affecting the overall exchange rate regime.
Speaking at a meeting with the Association of Ghana Industries (AGI), Dr. Amin Adam urged manufacturing companies to desist from practices such as converting cedi earnings into dollars and hoarding foreign currency, which he claims are contributing to the cedi’s depreciation.
He cautioned that the government might take stringent measures against such companies if these activities persist.
The Finance Minister highlighted instances where companies have kept large amounts of dollars in banks, leading to speculative pressures that harm the cedi’s value.
He cited a specific case where a company deposited $50 million in a bank, causing the cedi to depreciate by two points against the dollar.
In response, AGI’s Chief Executive Officer, Seth Twum Akwaboah, assured that the association would not protect any member found engaging in such activities.
He emphasized that AGI upholds high ethical standards and would investigate and take action against any member involved in practices that harm the national currency.
Mr Akwaboah also encouraged AGI members to adhere to best practices, warning that the association would not defend anyone caught engaging in activities that destabilize the cedi.
The AGI also took the opportunity to highlight various challenges facing the industrial sector, calling for support to address these issues.
The cedi as of July 19, 2024, per Central Bank data was trading at 14.7811 to the dollar, marking a substantial 19.6% depreciation since the beginning of the year.
The Finance Minister Dr. Mohammed Amin Adam has stated that the Ministry of Finance is working with the Bank of Ghana to implement measures to address the depreciation of the local currency.
These measures, he posited, include fast-tracking the fiscal consolidation process through rationalizing spending and enhancing revenue mobilization; intensification of the gold-for-oil programme, and the appropriate foreign exchange interventions by the Bank of Ghana.
Others include the intensification of the gold for reserve programme; the disbursement of the 3rd tranche under the 2nd Review of the International Monetary Fund-supported PC-PEG after the IMF Executive Board approval in June 2024; the disbursement from other ongoing projects including the $150 million World Bank loan and the expected disbursement of $300 million under the World Bank DPO2.
