Gov’t urged to redenominate the cedi as was done in 2007
Associate Professor of Finance, Professor William Peprah, has called for the redenomination of the local currency.
Redenomination of the cedi as was done by former President Kufour in 2007, Prof Peprah asserts, will cause financial psychology, economic and behavioural change on the part of currency dealers rushing to buy the dollar as a store of value.
Speaking in an interview, he noted the move will also lower prices and values of monetary commodities in the country since the cost of redenomination will be lower than the cost of inflation.
“The current situation in Ghana where we have seen the cedi devaluing and high inflation currently requires that the economic managers will have to consider again the cedi currency redenomination. In fact, I proposed that we take a zero off or divide the currency by 10; the value as you know will be the same”.
“It is 15 years after the last cedi redenomination. A similar situation was faced in 2006 and by July 1, 2007, the cedi was redenominated,” he mentioned.
On the expected benefits of the cedi redenomination, Professor Peprah said, “this will cause financial psychology, economic and behavioural change in rushing to buy the dollar or foreign currencies as a store of value”.
He pointed out that the cost of redenomination of the currency will be lower than the cost of inflation and the fast devaluation of the cedi.
“This must be considered within the next six months. This would lower prices and the value of monetary commodities in the country”, Professor Peprah indicated.
The last time the cedi was redenominated in 2007, four zeroes were knocked off. That means 10,000 will be equivalent to one Ghana Cedi.
Two of the reasons given by the Bank of Ghana for the re-denomination are the increasing difficulty in maintaining accounting and statistical records; and problems with accounting and data processing software.
For most business enterprises, such an exercise was expected to result in significant cost savings on the one hand but some challenges on the other.
