Aggressive expenditure cuts immediate solution to cedi’s depreciation – Ishmael Yamson

Economist Dr. Ishmael Yamson has advised the government to see expenditure cuts as one of the immediate solutions to dealing with the cedi’s depreciation.

He is of the view that an agreement with external creditors on debt restructuring is not the solution to the cedi’s poor performance in recent years.

“There is always a signalling effect that could convince investors about government commitment to stabilize the economy and help deal with our debt situation”.

“Government must been seen to taking some practicable measures and verifiable measures to cutting expenditure and how that could deal with the amount of fresh money that needs to be borrowed”, Dr. Yamson said.

The discussion was on the Topic on “Ghana’s Economic Recovery and whether we are on track?”

Dr. Yamson expressed concern about government’s short term borrowing through the Treasury bill market warning that it could impact on the cedi and the country’s debt situation.

Cedi’s performance

The cedi has struggled to stabilize against the major currencies, despite progress made by government on restructuring Ghana’s external debts.

The cedi on July 19, 2024 was trading at ₵15.56, the British Pound was going for ₵20.23. The Euro on the other was selling at ₵17.02 Pesewas.  This based on the average transactional quotes by some major commercial banks.

According to some of the commercial banks, the Telecommunications and Manufacturing sectors continue to be the leading sectors with demand for foreign currency. Trades executed on the interbank market were in the range of ₵15.38.

Ghana’s Exports and Cedi Performance

Dr. Yamson noted that government should watch developments in the cocoa sector as it can help to improve the cedi’s fortune going forward.

He raised some concerns about the recent decline in cocoa production and how it could affect Ghana’s earnings.

“With Ghana shut out of the Eurobond market, the proceeds from exports was very crucial in improving our international reserves”, he said.

Election Spending

Dr. Yamson is worried if government will be able to maintain fiscal prudence in an election year.

This is despite the International Monetary Fund programme and commitment to be disciplined with its spending.

He recalled that previous governments have failed to keep to the promises in terms on fiscal prudence.

“We can talk about Yaw Osafo Marfo who tried to ensure that we did not witness any serious election overrun”.