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.
According to Dr. Bawumia, 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.”
Giving an explanation to rcent fall of the Ghana currency at the maiden Town Hall Meeting, by the Economic Management Team (EMT), in Accra, Dr. Bawumia questioned “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.” He said.
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 March 15, this year.
This he said 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.
IMF conditions for completion of Ghana’s programme by April 2019.
The main pillars of the programme included sizeable and front loaded fiscal adjustment to restore debt sustainability, focusing on containing expenditures through wage restraint and limited net hiring, measures to mobilize additional revenues. He said.
Adding that, 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.” He indicated.
