Economist, Prof. Godfred Bokpin says, Ghanaians should be measured in their expectation for a further appreciation of the Ghana cedi.
For him, although the recent rise in the value of the cedi is refreshing, it is however not backed by any robust economic indicator thereby questioning its sustainability.
“Because it is not driven by strong economic fundamentals, you cannot say it is going to last. But at least, what we have seen is good. It means the system is responding to the changes,” Prof. Bokpin said in an interview during a roundtable discussion organized by the Citizen’s Coalition in Accra.
He stressed that the relative stability of the cedi against the major trading currencies can largely be attributed to speculations due to some budgetary decisions and the Staff Level Agreement reached by the government and the International Monetary Fund.
“The cedi thrives on technicalities and general sentiments. When the sentiment is good, the cedi feels it also. The 2023 budget has also brought some clarity in terms of the way forward with the Staff Level Agreement. All of these things working together moderate the economic uncertainties.”
The Ghana Cedi which has been under pressure this year is now seeing some cumulative gains.
But Prof. Godfred Bokpin believes this will be short-lived.
He advises the government to do more especially with its debt exchange program in order not to worsen the financial sector space.
“We have seen how the cedi is responding, but there is still a lot of work to be done. The Staff Level Agreement with the IMF is not the same as the program.
There is a lot of work because our debt level is unsustainable. The debt exchange in its current form is not in a good shape and may systematically weaken the balance sheet of the participating financial institutions.”
“If we are not careful, in our attempt to polish our public debt, we may be creating a crisis that will later come to bite us. Let us do the restructuring in a way that protects financial stability,” he further advised.