Address structural challenges for long term Cedi stabilisation –John Kwakye
Dr. John Kwabena Kwakye, Director of Research at the Institute of Economic Affairs, has warned that until the structural problems affecting the Ghanaian economy are addressed, any attempt to halt the continuous decline of the Cedi with capital injection would only be a temporary measure.
Speaking on the Zed Business Roundtable discussions on stabilizing the Ghana Cedi, he said the root cause affecting the Cedi’s stabilization has to do with basic underlying structural problems that successive governments have failed to address.
“We have not been able to tackle these structural problems. We have not been able to transform the economy to make a significant impact on our exports and also demand for imports.”
He said this would need policy directives that encourage production, reduce imports, and strengthen reserves. He added, for example, that a reserve of some $20 billion would help stabilize the local currency.
“Your currency is as strong as you have reserves to support it,” he said.
He was concerned that despite the wealth of knowledge on these matters to the government, it does not appear that the government is doing very little to put in long-term measures to stabilize the Cedi.
“The Currency is just depreciating, and I don’t see any concrete measures being taken to mitigate it, so I’m saying that well if we don’t have any solution to the problem, then let’s abandon the Cedi and adopt the dollar.”
He suggested further that a national policy that prioritizes ownership of the country’s natural resources is one sure long-term measure to ensure a stable local currency.
“Owning our natural resources is our lowest hanging fruit in stabilizing the Cedi.”
He lamented that while these and other measures are well known to the top class of economists in the country, they tend to abandon the principles the moment they attain political power.
“I don’t know, maybe when you are in government you are a different person. We all went to the same schools, we learned the same things. We know the same principles, and they make it look like solving our economic problems is like some rocket science,” he lamented.
