Professor Godfred Bokpin, an Economist at the University of Ghana Business School (UGBS) assured Ghanaians that the revival of the Cedi against some major trading currencies may not last long.
According to Prof. Bokpin, the resurgence of the Cedi was not from a strong economic fundamentals hence for it to depreciate in value is highly possible.
“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.”
“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.”
Professor Bokpin added that, the government must do more with debt exchange programme to reduce the risk of worsening 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 programme. 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.”
In his conclusion he said “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.”