Dr. Mahamudu Bawumia
An economist and Head of Finance Department, Ghana Business school, Godfred Bokpin has backed Dr. Mahamudu Bawumia’s claims that the exchange rates and inflation figures are not credible.
He asserted that there was a 23% variation in the figures published by the Bank of Ghana (BoG).
‘From January to May, there wasn’t so much of a wide variation, but then from June to July, the disparity between the Bank of Ghana’s official rate and the interbank rate jumped. For instance, the percentage difference between the two rates from July was almost 23%,’ he explained.
Dr. Bawumia, a former Deputy Governor of the central bank, has questioned the credibility of the exchange rates and inflation figures being published by the BoG and the Ghana Statistical Service (GSS).
Dr. Bawumia, the 2012 Vice Presidential Candidate of the New Patriotic Party (NPP), expressed concern about what he considers to be a ‘deliberate attempt by officials to massage the true state of inflation and depreciation of the Ghanaian cedi.’
According to him, while the local currency is trading at an average of GH¢3.8 to the dollar among banks, official figures had deceptively pegged the exchange rate at GH¢3.03.
The BoG, he said ‘would have us believe that since June 17 this year, the exchange rate of the cedi to the US dollar has remained unchanged at some GH¢3.03 per US dollar and has thus ‘remained fixed at this rate over the last three months.’
Dr Bawumia said, ‘A simple look at the interbank market exchange rates indicates that the cedi has not only been depreciating daily, but is currently trading between GH¢3.7 and GH¢4.1 per dollar with an average of some GH¢3.8 per US dollar.’
BoG New Rate
However, two days after Dr Bawumia issued his statement on August 21, the Bank of Ghana (BoG) adjusted its rate to GH¢3:13, saying the cedi has moved by a whole point (10 pesewas) and will now be trading on Monday at GH¢3.13.
The Financial Times of London, the Reuters the CNN and other financial analysts have estimated the cedi’s depreciation at over 40% this first half of 2014.
But the government claims the cedi has only fallen 22.9 %. Industry players have urged the two institutions to respond to the allegations to put the minds of Ghanaians at ease.
However, the two are yet to officially issue a response on the matter.
On Citi Fm’s, The Big Issue on Saturday, Mr Bokpin noted that the disparities in the figures suggest that ‘one market was dead and was not responding to the demand and supply dynamics. So either the Bank of Ghana did not update its own data or perhaps, it was an oversight.’
He added that at certain times, all we need to generate in the needed market is trust. If you want to look at the market value of trust just look at its absence.’
Mr. Bokpin urged authorities to be transparent in their dealings to allow them generate market trust and also admonished the Central Bank to provide clarification on this disparity.
The Obuasi West MP, Kwaku Kwarteng, also accused the Bank of Ghana of fraudulently manipulating the forex rate figures.
The MP, who backed assertions by Dr Bawumia on Saturday, said that he suspected BoG was up to no good.
He accused the Central Bank of warping the figures to conceal the truth about the depreciation of the Cedi.
By August 13, 2014, the Central Bank set the average exchange rate at GH¢3.03 to a dollar while the Statistical Service said inflation, as of the end of July, had risen to 15.3 percent.
Raising suspicions about the figures, Dr Bawumia wondered why there appeared to be such a wide gap between the figures quoted by officialdom and the reality on the ground.
‘Where in Ghana today can you buy a dollar at close to GH¢3.03? The large spread between the Bank of Ghana exchange rate and the interbank exchange rate indicates that the Bank of Ghana rate is being administratively set and not market driven,’ he said.
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