Cedi’s strength partly because government is not spending – Dr. George Domfe
Dr. Domfe also said that the debt restructuring program of the erstwhile Akufo-Addo administration has also helped the Cedi to gain strength against the US dollar
Development economist and the founding president of Africa Policy Lens (APL), Dr. George Domfe, has stated that one of the reasons behind the Cedi’s strength is as a result of government not spending.
Contributing to a panel discussion on TV3’s KeyPoints show on Saturday (17 May), Dr. Domfe emphasized that though government deserves some credit for the local currency’s strength against the dollar, government not spending much is one of key factors.
“While we must commend government for the strength of the Cedi, it is important to note that one of the major reasons is that the Mahama government is not spending much at this time. Contractors are not being paid for the projects they executed” he stated.
He also cautioned that government and its functionaries should hasten slowly in jubilation over the performance of the Cedi since it has been behaving like this anytime there is a change in government.
“The Cedi gaining strength against the dollar happens every time there is a change in government in the country. The same scenario played out in 2017 when NPP came to office, if we can recall. This is nothing new” he added.
Dr. Domfe who is also a Senior Research Fellow at the University of Ghana, also explained that prices of major commodities on the international market have gone down, thereby contributing significantly to the Cedi’s strength.
“We cannot discount the happenings on the international market as a contributory factor in the performance of the local currency against the dollar. Crude oil prices on the international market have come down, meaning less amount of dollars are needed to import them, and this contributes to the Cedi being strong”
Dr. Domfe also said that the debt restructuring program of the erstwhile Akufo-Addo administration has also helped the Cedi to gain strength against the US dollar.
He called on government to implement policies that can help the Cedi to remain strong in the short to medium term.
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