The Cedi is still Strong- Finance Minister

The Minister for Finance, Mohammed Amin Adam has made quite a strong case in favour of the strength of the cedi in the face of its steep devaluation to major currencies on the international market.

According to him the cedi has shown signs of strength despite having lost 14.2% of its value compared to same period last year.

Speaking at a presser on May 24, the Minister said “But for the recent trend, the Exchange Rate had been largely stabilised over some time with the depreciation of the cedi against the US dollar hovering from 54.2% at the end of November 2022 to 27.8% at the end of December 2023. The cedi stability has continued into 2024 with a cumulative depreciation of 14.2% as of May 20, 2024 compared to 20.7% recorded in the same period in 2023.”

“On that comparative basis we can say that the cedi is still strong,” he stated.

The cedi is trading around GHC15 to a dollar and Ghc19 to a pound sterling.

He expects stability in the medium term as the country completes debt restructuring, makes progress on fiscal consolidation and improving the foreign reserves.

Currently, he said Gross International Reserves stands at $6.2 billion covering 2.7 months of import cover at the end of February 2024 compared to $5.9 billion in the corresponding period of 2022.

“Gross International reserve is expected to improve to cover at least 4.4 months of import cover in the medium term to be supported by external flows from the IMF, the World Bank and other development partners, the government’s Gold for Oil Programme, the BoG’s Gold Reserve Programme as well as the Cocoa Syndicated Funds.”

Cause of Cedi fall
He attributed the recent fall in the value of the cedi to the strengthening of the US dollar against major trading currencies across the world as well as what he called seasonal Forex demand including elevated demands from corporate institutions.

Another factor he cited was circulation of more money in the market, a development he said emanates from the payment of contractors and Independent Power Producers (IPP). According to him, GHc49 billion has been spent in the payment of contractors and $400 million to IPPs.

Solution
To address this, Hon Amin Adam said the government is fast-tracking the fiscal consolidation process through rationalising spending and enhancing revenue mobilisation; intensification of the Gold for Oil Programme and appreciate FX interventions; intensifying through the BoG Gold Reserve Programme.

Meanwhile, he anticipates that the disbursement of ¢2.323 billion loans from the World Bank and other financial partners before the end of the year will go a long way to improve the country’s foreign exchange reserves.

He therefore urged Ghanaians to remain calm.

“I wish to assure Ghanaians that there is enough Foreign Exchange Supply on the market. Hence, there is no need to rush to buy forex. We will continue to ensure that the supply is sustained and increased.”