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Cedi Depreciation: It’s time to seek lasting solutions – Terkper

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Cedi Depreciation -It’s time to seek lasting solutions – Terkper

Cedi Depreciation: It’s time to seek lasting solutions – Terkper

Former Finance Minister under the erstwhile Mahama administration, Seth Terkper says it is time the managers of the economy and other relevant stakeholders focused on the issues that affect the cedi leading to its constant decline against other major trading currencies, particularly the dollar.

Seth Terkper believes the time is right to have a discourse devoid of politics as the nation like that which the nation witnessed prior to the 2016 elections when the performance of the currency was very topical.

He agreed that the issues confronting the cedi cannot be said to be specific as the economic conditions at different times affect its performance, however, there are some solutions that could be put in place in the short, medium and long term to check its performance.

The Ghana Cedi has declined close to 13% since December against the US Dollar and currently sells at about GHC5.56 to the Dollar.

This has caused many to raise eyebrows, particularly when prior to their election in 2016 and shortly after, Vice President Bawumia and other government spokespersons touted their competence in managing and improving the fortunes of the currency.

“I think it is time for sobering reflection by everybody because the Cedi was subject to intense debate and discussion during the last election and I don’t want to go over this, together with issues like I will not borrow when I come office, together with issues like we can arrest the Cedi, we know the fundamentals, so I think it is time for sobering reflections by all of us. It is good you have gone back and I think one of the lessons from going back is that there aren’t same set of issues, some will be similar some will be same but the economic situation differs from one time to the other but I think comparing the headlines is good,” he explained.

The Former Finance Minister added “It is time to focus on the issues collectively and look at the solutions. What solutions can be short term and what solutions over time will increase the supply of foreign currency because it is a question of people need the Dollars to pay for imports and that is the demand side, and there are the cocoa farmers, the miners and others who are boosting the supply.”

The Cedi under the former Finance Minister’s watch in 2014 depreciated by about 33% and 22% in 2015. This resulted in the release of forex into the economy by the Central Bank and issuance of “Home Grown Policies” and also the IMF deal.

Comparing the situation of the Cedi decline during his tenure and what the nation is experiencing now, Seth Terkper was baffled that the currency is experiencing such fall despite the amount of forex available to the government.

He said between 2017 and 2018, the government has had close to 200% more foreign exchange into the economy largely due to Oil prices and Cocoa prices.

On the back of this, he is convinced there is more to the current situation than is being speculated and has called for more open discourse about the matter to identify the challenges and institute appropriate measures.

The Former Finance Minister recounted, “from the end of 2015, 2016 when we had this crisis, when the prices went down output went down. The supply of foreign exchange from Oil was $500 million. Today, we are making about $1.8 billion from crude oil alone to compliment cocoa. That is why I mentioned the period. What is it that may be going on that we may not know? Considering that if you compare the period now from back then, there is more supply into the economy, so what is it that is not working?”

His call for broad discussions about the declining currency comes at a time when renowned economist, Dr Nii Moi Thompson has made similar proposal arguing that no single government has the brains to solve the currency and economic challenges of the country.

Source: awakenewsonline.com

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Akufo-Addo is a transformational leader – Economist

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Akufo-Addo is a transformational leader – Economist

Mr Habibu Adam, an Economist, on Friday said President Nana Addo Dankwa Akufo-Addo is a transformational leader who’s like is yet to be witnessed in the fourth republic.

“Right from Election 2016 campaigns to his inaugural speech on January 7, 2017 to the first budget of the new administration, the rhetoric of the President has sort to portray him as a transformational leader not seen in the Fourth Republic,” Mr Adam told the Ghana News Agency in an interview.

Mr Adam, who is also a Senior Economist at the Office of the Senior Minister, said this is based on the State of the Ghanaian economy and two years into Nana Akufo-Addo’s Government- “What are the real issues? And Why Ghanaians should be patient”.

He said the President came to meet challenges – coming at a time that the economy was experiencing low growth, rising rate of unemployment, high fiscal deficits, high and rising debt, and increased depreciation of the cedi, high cost of food, housing and utilities and high non-performing loans amongst others.

He said President Nana Akufo-Addo also inherited an economy with symptoms of deeper structural problems that required a wide range of reforms.

“As usual with the United Party (UP) tradition, the agenda was set right from the inaugural speech. However, many doubted the capability of the government in carrying out its ambitious plans considering the International Monetary Fund’s (IMF) programme and the declining growth of most of the sectors of the economy.

“It is important to note that virtually all the targets set under the IMF programme have been missed as at the end of December, 2016. For instance, a Gross Domestic Product (GDP) growth (including oil) of 3.6 per cent was the lowest in 23 years- a deficit target of 5.3 per cent under the IMF programme was missed.

“The actuals were 9 per cent on cash basis and 10.2 per cent on commitment basis,” Mr Adam said.

The Senior Economist said Ghana’s total public debt from independence to 2008 (52years) stood at GH¢ 9.5 billion (33 per cent of GDP).

However, by 2016, the public debt had ballooned to GH¢ 122 billion (73.1 per cent or the revised figure of 56.6 per cent of GDP). Interest payment was about GH¢ 14.1 billion 6.2 per cent of GDP.

Mr Adam said the difficulty faced by Nana Akufo-Addo’s government was that three budget items consisting of wages and salaries, interest payments and amortization and statutory payments consisted 105 per cent of government revenue.

“This means that government had additional 5 per cent to meet the three budgetary items,” he said.

He said the state of the Ghanaian economy was akin to the ‘HIPC’ economy the Former President John Agyekum Kufour’s government inherited in 2001 except that there was no HIPC benefits this time since Ghana is now a Middle-Income Economy.

“The only alternative left for the Nana Akufo-Addo’s government was to borrow initially to stabilize the economy before pursuing its growth agenda.

“This is the most popular option among Keynesian Economists. Hence, the rise in public debt for the first two years of the current administration.

“The good news is that while in the past we could not relate the debts to projects or programmes in proportional terms, the current administration now provides the lists of all the borrowed funds to specific projects and programmes,” Mr Adam added.

Source: GNA

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Maintain freeze on public sector employment after IMF exit – Economist

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Maintain freeze on public sector employment after IMF exit – Economist

Maintain freeze on public sector employment after IMF exit – Economist

The government has been warned to resist any temptation to lift the ban on employment into the public sector at the end of the International Monetary Fund (IMF) programme on April 2.

Speaking to Citi News, Economist at the University of Ghana, Dr. Ebo Tuckson said Ghana needs to move beyond government being the main supplier of jobs.

“We shouldn’t, once we leave, freeze public sector employment because when we do that, then we inflate the wage bill. That is one of the main reasons for expenditures that normally cause us to run huge fiscal deficits.”

“We should rather provide the environment for the private sector to thrive; for the private sector to generate employment and jobs that the economy needs,” the lecturer said.

In 2015, the three-year loan agreement concluded between the Government and the International Monetary Fund (IMF) contained agreements to freeze employment in government departments except for those under education and health.

This was part of measures to stabilize the economy and effectively manage the public wage bill.

The agreement was also expected the government to limit the nominal increase in the total wage bill to no more than 10 percent.

Ahead of the election in 2020, Dr. Ebo Tuckson also urged the government to be measured in its spending so it does not overrun the estimated budget for the year.

“If you look back over the fourth republic, with the exception of President Kufuor in his second election, where he was able to maintain the budget and not overrun it, all other government’s we have had have overrun their budget… The politicians, you know, when things heat up and things have to be done, that is when we sacrifice all these things and overrun the budget.”

IMF journey ends

The Executive Board of the IMF just approved the final disbursement of about US$185.2 million to Ghana.

The IMF Executive Board completed the seventh and eight reviews on March 20, 2019, under the Extended Credit Facility (ECF) supported arrangement.

The fund pointed out that, considering Ghana’s resolve to tackle difficult reforms, the Executive Board also approved the authorities’ request for a waiver of the nonobservance of a few program targets.

Ghana’s three-year arrangement was approved on April 3, 2015, for about US$925.9 million or 180 percent of quota at the time of approval of the arrangement.

It was extended for an additional year on August 30, 2017, and is to end on April 2, 2019.

The arrangement aimed to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation while protecting social spending.

Source: citinewsroom.com

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Bawumia to engage Ghanaians on country’s economy on April 3

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Bawumia to engage Ghanaians on country’s economy on April 3

Vice President Dr Mahamudu Bawumia and Head of the Government’s Economic Management Team, will on April 3, lead government team to a Town Hall Meeting at the College of Physicians and Surgeons to answer questions from the public on government policies and programmes.

The meeting, under the auspices of the Ministry of Information, would enable government officials, including state actors such as Ministers of State, Metropolitan, Municipal and District Chief Executives and heads of agencies to provide account of their stewardship and provide vital information to the public.

It would also afford Ghanaians the opportunity to ask pertinent questions bordering on the various sectors of the economy and make contributions towards the governance process.

Mr Kojo Oppong-Nkrumah, the Information Minister, addressing journalists at a media encounter in Accra on Wednesday, said the maiden town hall meeting would come off on March 29 at Kasoa Datus School Park.

He said a total of 24 separate town hall meetings would be organised across the country this year.

The Minister said the town hall meetings were designed to bring governance closer to the people and showed a major shift in the government policy to make information accessible and useable by both Ghanaians within and in the Diaspora.

The town hall meetings, he said, would be accompanied by exhibitions by the Information Services Department that would provide pictorial and audio visuals of government activities over the past two years.

Mr Oppong-Nkrumah also used the media encounter to brief journalists about the Vice President’s official visit to India, to participate in the 14th Confederation of India Industries EXIM Bank on India-Africa Partnerships held in New Delhi, India.

Vice President Bawumia encouraged more investments for the country and held separate meeting with the India EXIM Bank officials.

During the meeting, Mr Oppong-Nkrumah said the Vice President signed a $150 million financing facility for agricultural mechanisation in Ghana and a $30 million facility for the Yendi water project.

The Minister explained that the $150 million facility would be used for provide equipment and training for the various agriculture mechanisation centres and service of equipment centres for access to farmers, while financing of the Yendi water project would aid in ensuring rapid socio-economic development in the area following the peaceful resolution of the age-long chieftaincy litigation.

Source: 3news.com

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