Vice President Dr Mahamudu Bawumia has blamed the recent depreciation of the cedi on directives from the International Monetary Fund (IMF) to the Bank of Ghana.
The cedi recently hit an all-time low recording a rate of GH¢5.86 to a $1.
The depreciation of the cedi against the dollar, according to the Minority added some GH¢15.3billion to the country’s external debt stock.
The cedi since last month, however, begun recording some marginal appreciation closing at around GH¢5.56 against the dollar on March 15, 2019.
Speaking at a maiden Town Hall Meeting of the Economic Management Team in Accra Wednesday, Dr Bawumia said: “The most important and the proximate cause of the recent depreciation is the time inconsistency of an IMF prior action on the reserves target.”
According to him, at the end of January 2019 as part of the seven prior actions to get to the IMF board and the completion of the IMF programme, the Brenton Wood Institution gave Ghana seven actions to complete before March 15.
“One of the conditions that the Bank of Ghana had to meet was to increase its net international reserves to the level of December 2018. To increase the net international reserves, however, meant that the Bank of Ghana could not sell any foreign exchange in the market. They had to essentially hold their hands to the back and could not intervene on the market during this particular period.
“So demands for foreign currency was not met by supply as normally happens on a day-to-day basis, and we know when the demand is greater than the supply or the supply is not coming, the price will go up and this exactly what was happening,” he said.
Denying claims that the Bank of Ghana used about $800 million to shore up the economy to save the Cedi, Dr Bawumia said: “The market corrected itself. Investor sentiments acknowledged that the fundamentals are much stronger than expected.”
“That would not make sense,” he added.
The Town Hall Meeting is being attended by civil society groups, economic think tanks, trade unions and stakeholders in the financial sector.