The Minority in Parliament has called on vice president Dr Mahamudu Bawumia, as head of the Economic Management Team, to provide answers to five questions relating to the economy.
Speaking at a roundtable discussion Wednesday, minority Spokesperson on Finance Cassiel Ato Forson said the recent “monetary policy easing by the Bank of Ghana is nothing more than populist approach and is a key factor fueling the recent exchange rate depreciation.”
He has therefore served Dr. Bawumia with the following questions to answer:
“Now, the head of the government Economic Management Team, Dr. Bawumia must provide answers to the following five (5) questions: Question 1: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate against its own research findings that US policy normalization is strengthening the US dollar and causing investors to move funds away from emerging economies and that upward adjustments in domestic prices of petroleum products are likely to affect transport and utility prices?
“Question 2: Why would an independent central bank, with a focus on price stability, decide to lower the policy rate in the face of dwindling net international reserves and a rising interest rate abroad?
“Question 3: Why would an independent central bank with focus on price stability decide to reduce the monetary policy rate in favour of growth, which has been projected to be higher than the previous year’s, while the local currency is under pressure?
“Question 4: Why would an independent central bank with a focus on price stability decide to lower the policy rate in the face of excess liquidity in the banking sector emanating from banks increasing their minimum capital by over 100 percent, while the local currency is fast depreciating?
“Question 5: Clearly, an economy cannot be externally unstable and internally stable. How can a rapid exchange rate depreciation be accompanied with a single digit inflation rate as captured by the posted macroeconomic indicators?”
Based on the above, the Minority is calling for a new budget from the Akufo-Addo government in the wake of the depreciation of the cedi against major international currencies.
The Cedi until Thursday, March 14 had fallen deeply against international currencies especially the dollar, by some 5 per cent trading at around GH¢5.90.
It has, however, begun to record some marginal appreciation against the dollar closing at around GH¢5.56 against the dollar on March 15, 2019—a development which is largely due to the injection of dollar cash by the Bank of Ghana last week.
According to the NDC MPs, the 2019 budget presented a couple of months ago has been rendered useless by the depreciation of the Cedi and other challenges in the economy.
“The depreciation of the cedi has put the economy in disarray and the projections surrounding it as contained in the 2019 budget. This has therefore undermined the confidence in the economy and sends a wrong signal to the investor community,” he said.
He continued, “This calls for urgent steps to be taken by the government to restore the economic health. The starting point is that we should be immediately presenting a new budget which considers all distortions and the serious problems occasioned by the fall of the value of the cedi.
“At the minimum, we expect a statement to parliament assuring the nation and investor community of the steps taken by government to address the instability of the economy and that…the budget as presented by the Minister of Finance can no longer be relied upon as true blueprint upon which to manage the economy for the year.”