Dr Ebenezer Ashley
While the rippling effect of the novel coronavirus pandemic continues to ravage economies around the world, including Ghana, an economist and a business consultant, Dr Ebenezer Ashley, has praised the Akufo-Addo government for its sterling management of the economy that has sustained the Ghanaian currency from over-depreciating.
Dr Ashley says while many currencies around the world have over-depreciated, the Ghana cedi has recorded its all-time best performance for the first half of 2020, than the first six months of any year since 2012, against the U.S dollar.
“You see, as the data shows, the cedi’s performance shows a first six months depreciation of 26.71 per cent for 2014; 26.2 per cent for 2015; 3.26 per cent for 2016; 3.73 per cent for 2017; 2.37 per cent for 2018; 8.35 per cent for 2019; and 2.36 per cent for 2020.
“The depreciation so far this year is the lowest since 2014, and this is particularly remarkable in the context of the COVID-19 pandemic,” he said in a media interview.
He explained that as at June 2020, the South African currency had depreciated against the US dollar by 21.4 per cent; Mauritius by 9.3 per cent; Brazil by 31.6 per cent; Turkey by 15.4 per cent; Argentina by 17.9 per cent; Russia by 16.0 per cent; Zambia by 28.2 per cent and Mexico, 17.4 per cent.
Good job
“So, when you consider that the Ghana cedi has only depreciated by 2.4 per cent, thus far notwithstanding the pandemic, one will have to congratulate the managers of the economy, especially the Bank of Ghana, for a good job done,” he said.
He stated that between 2017 and 2020, the cedi has depreciated at an average of 8.7 per cent, compared to 18 per cent between 2013 and 2016.
“This means that if the cedi had continued depreciating by an average of 18 per cent annually since 2017, as was the case under the previous government, then today the exchange rate of the cedi to the dollar would have been GHC 7.6,” he noted.
He explained that the performance of the cedi cannot, primarily, be attributed to the Covid-19 since all the other countries registering large depreciations are also seeing declines in imports as well.
He believes that the prudent management of Ghana’s economy and the strong and steady economic fundamentals, such as inflation, interest rates, gross international reserves, are the factors that have accounted for the relative stability of the cedi.
Dr Ashley however warned that the full effects of the COVID-19 pandemic are yet to be felt, saying the deficit this year is going to increase because of increased borrowing as revenues have fallen. Expenditures on the other hand have increased to deal with the pandemic. “This is however not peculiar to Ghana and even the richest countries are engaging in deficit financing to cope with the pandemic”.
“This year is about saving lives and livelihoods and not about lower deficits and debts,“ he added.
