Cedi depreciation: BoG's stabilization measures are ineffective. Adongo -
Isaac Adongo, the deputy ranking member of the Finance Committee, has questioned the practicality and effectiveness of measures announced by the Bank of Ghana (BoG) to deal with the cedi's depreciation against the US dollar.
He claims that, despite the Central Bank quoting lower interbank rates, the business community is struggling to obtain dollars at such rates due to scarcity.
Mr. Adongo argued that the dollar is in the hands of black market operators known as Abochis, in response to President Akufo-measures Addo's to halt cedi depreciation and put the economy back on track.
“You have over 70 billion that do not belong to the economy chasing the dollar. So the dollar will definitely collapse the cedi and that is caused by the Bank of Ghana.
“When you do that then you need to mop up the excess liquidity. You need to find a way to get that money back to the banking sector and probably back to the Bank of Ghana. In doing so you must continue increasing the policy rate and the policy rate has been increased over the period,” Mr. Adongo stated on Morning Starr with Francis Abban Monday.
The lawmaker indicated that the situation will therefore create a difficult environment for the business community.
“Because he must be able to find a business that gives him 35% of return or margin in order to pay the interest and have something to survive on. The government will have to pay a very huge sum of money to borrow, so the government is now borrowing at 33% for 90 days.
"As a result, the government does not even have the revenue to service this 33%, and the cycle continues." So the Bank of Ghana, which has thrown money into the economy to chase the dollar and is now attempting to bring those funds back into the economy, is now making life difficult for business owners.
"If the Bank of Ghana announces a rate of 12% or 1%, do you have the dollar to give at that rate? No, you don't." Abochi has the dollar, which he claims is Ghc20. So the Bank of Ghana has only a piece of paper to announce the rate, but the Abochi has the dollars, and this is where we are," Mr. Adongo explained.
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