The deputy ranking member of the Finance Committee, Isaac Adongo has questioned the practicality and effectiveness of measures announced by the Bank of Ghana (BoG) to deal with the depreciation of the cedi against the US dollar.
According to him, even though the Central Bank has been quoting lower interbank rates, the business community is struggling to get dollars at such rates given the scarcity.[adrotate group=”2″]
Commenting on President Akufo-Addo’s measures to halt the cedi depreciation and bring the economy back on a good footing, Mr. Adongo argued that the dollar is rather in the hands of black market operators popularly called Abochis.
“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.
“The end result is that the government doesn’t even have the revenue to service this 33% and it’s back in circles. So the Bank of Ghana having thrown money into the economy to chase the dollar and trying to bring those monies back into the economy is now creating difficulty for the businessman.
“If the Bank of Ghana says the rate is 12% or one percent, do you have the dollar to give at that rate, no, you don’t have. Abochi has the dollar and he says it’s Ghc20. So the Bank of Ghana only has a paper to announce the rate but the Abochi has the dollars and this is where we are,” Mr. Adongo stated.