Member of Parliament for Ofoase Ayirebi, Kojo Opong Nkrumah, says that the current conditions, which have enabled the Bank of Ghana (BoG) to manage the depreciation of the Cedi against the major trading currencies, were the result of the measures introduced by the previous administration.
He cited the gold purchase programme, introduced in 2021 under the Akufo-Addo administration, as the factor that has enabled the BoG to have enough forex to ensure market intervention.
To him, no strange thing has been done by the current managers of the economy, especially the central bank, in handling the Cedi.
Reacting to the 60th anniversary launch of the Cedi, while speaking on the floor of parliament, Oppong Nkrumah said, “As we celebrate 60 years of the Ghana Cedi, to many Ghanaians, the most important question is, what is the value of the Cedi? What can it really buy?
“That brings to mind two specific questions: the question of inflation targeting and inflation management, and the exchange rate. Mr Speaker, if you have studied the economic history of our country, our cedi performs very well at some point in time and also very poorly at some point in time. Whenever a government has access to large volumes of forex reserves to do what they call market intervention, the Cedi is able to stand its ground against international currencies, and whenever we run short of hard currency, the depreciation gets very dire.
“I am happy to reiterate the comment made by the Minister for Education that the governor announced about 37.4 per cent appreciation of the Cedi year to date. The question is how? But I think the government has answered it already by saying that it is because they are doing market intervention. In fact, this month alone, the BoG is dumping about 1.3billion Dollars onto the market, that’s the reason for the appreciation, so where are they getting these dollars from?”
He added that “Mr Speaker, it is because in 2021 a gold purchase programme was introduced for the first time in our history, aimed at enabling the state, through the BoG and the PMMC, buy gold and increase our gold reserves, that is why we moved from 8 tonnes to 30 tonnes. At that time, gold prices were averaging about 1,700 dollars per ounce.
“Today, gold prices are averaging about 4,000 dollars per ounce. So, because of this gold purchase programme, we are able to mobilise a lot of forex, and the central bank is now doing a lot of market intervention with the forex. Has anything strange happened? No. It is because of the conditions of the market and the introduction of the gold purchase programme that today we are able to mobilise a lot of forex through the BoG and the Godbod, which used to be PMMC, and this forex is now being dumped onto the market.”
“It begs the question that if you leave the market to the normal forces of the demand and supply of currency without the market intervention, will we get the 37.4% appreciation? Respectfully, I doubt,” he added.
