Vice President Dr Mahamudu Bawumia says the Bank of Ghana (BoG) did not spend any reserves to revive the cedi following the initial depreciation.
He dispelled rumours that the BoG injected about $800 million into the company to save the depreciating cedi.
He noted that the continuous cedi depreciation at the end of March 2019, was as a result of some exit conditions of the International Monetary Fund (IMF).
“At the end of March 2019, the cedi had depreciated by about 5.18 percent so far this year. We have to understand how come we saw this sort of movement in the exchange rate a few weeks ago. Why did it jump so far? Many reasons have been given but let me tell you what happened. The most important and proximate cause of the recent depreciation is the time inconsistency of an IMF prior action on the reserves target.”
Dr Bawumia said as part of the seven prior actions to get to the IMF board and the completion of the IMF programme, the Bretton Woods Institution gave Ghana seven actions to complete before 15th March this year.
This resulted in the cedi recording a rate of GH¢5.86 to $1 .
According to the Vice President, the economic fundamentals of the nation is strong following the country’s exit from Tthe IMF on April 2, 2019.
Vice President Dr Mahamudu Bawumia said this at the maiden Economic Management Team Town Hall Meeting organised at the College of Physicians and Surgeons in Accra.
IMF conditions for completion of Ghana’s programme by April 2019
The main pillars of the programme included
- sizeable and frontloaded fiscal adjustment to restore debt sustainability,
- focusing on containing expenditures through wage restraint and limited net hiring,
- measures to mobilize additional revenues.
- There are also the structural reforms to strengthen public finances and fiscal discipline by improving budget transparency,
- cleaning-up and controlling the payroll,
- right-sizing the civil service and improving revenue collection
- Other pillars of the program include restoring the effectiveness of the inflation targeting framework to help bring inflation back into single-digit territory and preserving financial sector stability.
