The Member of Parliament for Manso Nkwanta, Tweneboah Fokuo, has questioned the structural soundness of the recent appreciation of the Ghanaian cedi, arguing that the current Mahama administration cannot take credit for any significant forex buffer growth.
Speaking on The Big Issue on Citi FM on Saturday, July 26, the MP contended that the gold reserves inherited from the previous New Patriotic Party (NPP) administration under President Akufo-Addo formed the bulk of Ghana’s foreign exchange support system, with the current government contributing marginally since assuming office.
“Yes we talk about gold reserves but check – I have checked, if you check gold reserves that were built by the previous administration before leaving, and gold reserves that have been built up by this administration, you see that it was just about 1 metric tonne that has been built up by this government. So this government cannot pride itself that it has structurally changed something that led to the Cedi’s appreciation,” he stated.
Fokuo argued that the cedi’s recent stability is more the result of temporary factors such as the weakening of major international currencies and short-term liquidity injections by the Bank of Ghana, rather than fundamental policy reforms.
“The interventions that the Central Bank has been having in the market now – that is not sustainable. You can’t continue pumping dollars into the system, yes temporarily, but economics will teach you something.”
He warned that unless structural reforms are implemented, Ghana risks a reversal of the recent gains.
“The strength of an economy is not determined by just pumping money. It’s not sustainable – economics will tell you it’s all about Balance of Payment. At the end of the day, what you send out [and] what you take in, if you net it off, what is left, that will determine the strength of your currency. So if we want to maintain the strength of the cedi, we should do that structurally.”