Agric Sector Declines

Kwesi Ahwoi Minister of Food Agriculture

Posted on: www.businessguideghana.com

Accra, Tuesday August 28, 2012

In spite of the significant expansion in the cocoa sector, Renaissance Capital says growth in the agriculture sector has declined.

In its August Macro-Economic Update, analyst Yvonne Mhango explained that agriculture grew by a weak 0.8 per cent in 2011 and contracted by 2.9 per cent year on year in first quarter of 2012, compared to growth of 5.3 per cent in 2010 and zero growth in first quarter of 2011.

“We struggle to understand how agriculture declined in first quarter of 2012 when the sub-sectors that represent 95 per cent of its production recorded growth. Nevertheless, the agriculture growth numbers suggest weakness.”

Renaissance Capital noted that in the four sub-sectors it was only the fishing sector that declined but crops production, which makes up over 75 per cent of agricultural output, grew by 5 per cent year on year while cocoa production grew by 14.0 per cent.

According to the report, the Ghana Statistical Service (GSS) attributed agriculture’s underperformance in 2011 largely to “the contraction of the forestry and fishing sectors and a slowdown in crop production’s growth to 3.7 per cent in 2011 from 5.0 per cent in 2010.”

It said Ghana’s economy expanded by a sizeable 14.4 per cent in 2011, its first full year of oil production and continued to exhibit strong growth in first quarter of 2012 when it grew by 8.7 per cent year on year, up from 3.0 per cent year on year a year earlier.

“The double-digit growth in 2011 largely reflects the strong performance of the industrial sector, which grew by 41 per cent in 2011.”

“Aside from the extractive sector (mining and oil production) that propelled growth to over 200 per cent in 2011, manufacturing and construction also demonstrated strong growth of 13 per cent and 20 per cent respectively.”

It said the industrial sector’s performance “is masking the under-performance of some significant non-oil sectors in our view.”

“Strong growth implies scope for further monetary policy tightening however, growth is less-than-stellar outside of industry and oil-related sectors,” it noted.

New GH¢50 Out...20m Pieces In Circulation

Dr. Henry K. Wampah displays a new note. Pix by Christopher Scotti 

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Wednesday August 22, 2012.

The Bank of Ghana (BoG) yesterday officially launched the improved GH¢50 into circulation, but the Central Bank failed to disclose the cost of the entire exercise.

Although there are speculations that the government is spending US$30 million to print the new GH¢50 notes, the acting Governor Dr. Henry Kofi Wampah was unable to disclose the cost of the exercise.

H said: “I cannot tell you how much was involved…maybe later.”

The upgraded GH¢50 denomination, which would replace the notes currently in circulation, has been introduced to curb what the Central Bank termed as counterfeiting.

The number 50 at the bottom of the front on the new GH¢ 50 is now green instead of gold and it bears the signature of Paa Kwesi Amissah-Arthur, the previous Governor who became the Vice President.

At a short media encounter in Accra yesterday, Dr. Wampah said the new GH¢50 had secure features to avoid a general loss of confidence in the denomination, which is Ghana’s highest note.

He said it comes with a public recognition feature called spark in the form of a green cocoa pod at the bottom right hand corner of the banknote and that feature replaces the hologram on the older note.

“It has arrived and today we are undertaking the inaugural issue,” he said.

The acting Governor said the old notes would run concurrently with the new notes until September 30, 2012. Thereafter the old notes will cease to be legal tender and can only be exchanged in the banks.

He defended security features on the new notes, adding, “You do not have to strain your eyes to see it clear. It would be difficult for people to counterfeit the new notes.”

He said education on the new currency would continue for some time and urged that the notes be kept clean to maintain currency durability.

Catherin Ashley, Head of Currency Management Department at the BoG, said approximately 20 million pieces of the new note are currently in circulation across Ghana.

She also said about 11 million pieces of the old notes were in the system and they were working hard to phase them out.

Gov’t Spending Weakens Cedi

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Wednesday August 22, 2012.

Renaissance Capital has attributed the continuous weakening of the cedi against major international currencies partly to early government spending.

“While we expected an increase in financial outflows as the December elections approached, we had not anticipated them to begin so early in the year.”

In the firm’s August Macro-Economic Update, analyst Yvonne Mhango said the subsequent drop in foreign exchange reserves explains the 20 per cent depreciation of the Ghanaian cedi in July 2012 to GHS1.96 against $1.

The report said the weak cedi partly reflects financial outflows of the country, adding “we are of the view that financial outflows increased significantly during this period, particularly short-term money.”

“We expect this to have contributed to the widening of the current account deficit during this period in addition to the increase in services and income payments, which comes with the new oil industry.”

It said in their view, the sharp decline in Ghana’s foreign reserves is partly due to the widening of the trade deficit in May 2012 by 57 per cent to $937million, owing to a high international oil price that inflated the import bill and lower-than-expected oil export volumes that undermined export earnings.

Ghana’s gross international reserves declined by $1.1bn to $4.3bn or 2.5 months of import cover in May from $5.4bn or 4 months of import cover at YE11.

“Typically, economies with import cover of less than three months are considered to be vulnerable to external shocks such as a sharp increase in the oil price,” it said.

In order to stem what the Bank of Ghana (BoG) viewed as “speculative activity” in the interbank currency market that was exacerbating cedi failing, the BoG implemented measures that would ultimately stem cedi weakness.

Some of the measures included hiking the policy rate by 250 basic points (year to date) and reducing the limits on net open forex positions of banks, reintroducing BoG bills to provide additional avenues of cedi investment.

Others were revision of application of the statutory reserve requirement so that banks maintain the mandatory 9% reserve requirement on domestic and foreign liabilities in cedis only as well as requiring all banks to provide 100% cedi cover for their offshore account balances to be maintained at the BoG.

The think tank said “we have noted the retracement of the cedi to 1.94/$1 from mid-August, suggesting that a combination of the afore-mentioned policies may be taking effect.”

They however said “as it is still a few months to elections, we project some further weakness to GHS2.0/$1 at YE12.”

91-Day Bill Yield Raises Concern

Bright Simons is a researcher at IMANI Centre for Policy & Education

Published on www.dailyguideghana.com

By William Yaw Owusu

Accra, Wednesday August 22, 2012. 

The announcement by government last week that the yield on its 91-day treasury bill had risen to 22.91 percent from 22.80 percent at the last public sale is raising concern.

According to Bright Simons, lead research at IMANI Centre for Policy and Education, the expansion of borrowing requirements of the government are driving up yields on treasury bills.

He said pressures of mopping up cedis to support the currency's value against the dollar were also contributing to the widening of the yield and must be checked.

He told CITY & BUSINESS GUIDE that managers of the economy were engaged in what he called “the bluffing game” with the market when it put in place some measures to counteract the rise in the value of the dollar.

“The idea is to make the dollar less appealing as a reserve currency for risk-shy investors but at the same time the government is looking to the use of short-term debt to plug the growing budget gaps.”

He said “the result of that exercise was a failure that was quickly transitioned to assaults on forex holders in the form of ad hoc restrictions on forex-based transactions in the economy.”

Mr. Simons, who is also the president of Mpedigree, also noted that already there were signs that the strategy had failed to work, thereby putting what he called “even greater cyclical pressure on the latest, more orthodox approach of using the government securities markets.”

“The problem is that these thrown-together activities create the impression of government finances slowly unraveling and just one step away from out-of-control.”

But with inflation rising at the same time and the policy rate rising in response, the government is fast running out of the maneuvering room.

He said unless actual austerity measures were pursued “the market will see through the gimmickry and begin betting against all the critical rates. That will spell continuing gloom for the Cedi, interest rates and the budget deficit.”

According to BoG, it sold 256.33 million Cedis ($132 million) of the 91-day paper out of a total 324.07 million Cedis of bids tendered on August 9.

Double-Digit Inflation Coming

Dr. Kwabena Duffuor, Minister of Finance and Economic Planning

Posted on: www.businessguideghana.com

By William Yaw Owusu

Accra, Tuesday August 21, 2012

Renaissance Capital has predicted a double-digit inflation before the end of 2012.

“We expect inflation to rise into the low double-digit region by year end 2012 due to the proposed increase in government spending and base effects.”

In the firm’s August Macro-Economic Update, analyst Yvonne Mhango said “we think a more stable cedi in second half of 2012 on the back of the raft of policy measures that the Bank of Ghana (BoG) implemented in first half of 2012 is positive for the inflation outlook.”

The report said acceleration of Ghana’s inflation had been significantly slower than expected.

“Headline inflation increased to 9.5 per cent year on year in July from 8.4 per cent a year earlier despite the cedi’s 30 per cent depreciation against the dollar over the same period, to GHS1.96/$1.”

It acknowledged that low food inflation had helped to keep headline inflation in the single-digit region and added that “however, food inflation also has edged up over the past 12 months to 5.8 per cent year on year in July from 3.3 per cent a year earlier.”

“That said, we expected most of the inflationary pressure to stem from non-food items, particularly from housing and utilities’ costs and transport prices, owing to particularly high oil prices in first quarter of 2012 and from clothing and furnishings, given that significant shares of these goods are imported.”

The think tank said non-food inflation only increased to 12.4 per cent year on year in July from 11.3 per cent at year end 2012, explaining that “all this points to downwardly sticky inflation, which has delayed its return to the double-digit region in our view.”

On the budget deficit, the report attributed fiscal slippage to wage costs saying “Ghana has a history of running up bigger-than-targeted budget deficits in elections years, particularly in the post-military-rule period.”

It said the only exceptions were 2000 and 2004, the year before Ghana qualified for debt relief, 2005 when the authorities worked hard to narrow the deficit to improve the country’s prospects.

It added that one of Ghana’s worst fiscal slippages was during the last election in 2008 when the outgoing New Patriotic Party (NPP) government ran up a budget deficit of 8.5 per cent of GDP, which was significantly bigger than the target of 2-3 per cent (under the rebased GDP).

“The National Democratic Congress (NDC) administration managed to narrow the deficit until 2011 when the budget deficit came in at 4.4 per cent of GDP, below the target of 5.1 per cent.

However, in July, Finance Minister Kwabena Duffuor proposed a supplementary budget of GHS2.6bn ($1.34bn) that would allow for an increase in spending of 1.9 per cent of GDP and a wider budget deficit of 6.7 per cent of GDP.”

Cedi Depreciation Hits Telcos Hard

Philip Sowah, MD of Airtel

By William Yaw Owusu

Accra, Tuesday August 21, 2012

Philip Sowah, Managing Director of Airtel has stated that the depreciation of the cedi against the major trading currencies, particularly the dollar, is affecting the telecoms industry.

“We are taking a hit for the depreciating cedi. A lot of our contracts are dollar-based. It had been very tough for us but we are confident that things will get better,” he told senior business and finance editors in Accra last Friday.

He said while prices of goods and services had been increased generally, the keen competition in the telecoms sector had ensured that tariffs remained stable in the sector.

The development, according to him, had forced them to top-up production cost without meaningful returns.

“For us at Airtel, we are building a sustainable business. We are not in a hurry to make money. We want to stay in Ghana for a very long time and we are investing in the right infrastructure to get us there.”

He said currently, Airtel is deploying 100 additional cell sites across Accra alone to expand its 3G services, adding “we want about 20 per cent of our revenue to come from data provision services and from what I see, we are getting there.”

“We are expanding heavily in the data network. Our 3G service has become strong and we are moving to get Accra blanket coverage.”

Mr. Sowah said the process whereby the companies share masts, commonly referred to as co-location, was becoming increasingly significant in the industry.

“We currently have over 1,000 cell sites across the country and the co-location process has further expanded our reach. We want to continue to intensify the co-location agenda.”

He described the Mobile Number Portability (MNP) as the best run project in the sector, stating that Airtel would take advantage of the project to reach more people.

“We have crossed the 3 million subscriber mark. We have a high number of customers who use our services and about 80 per cent of them use the services we provide in any 30-day period.”

Mrinal Roy, Chief Operating Officer said Airtel has the best data speed currently and they were constructing more infrastructure projects to ensure that the company continues to maintain its leadership as data service provider.

“We want to be the most transparent network and our corporate social responsibility is giving us satisfaction to do more, he said, adding that Airtel was committed to ensuring affordability and accessibility.

Oare Ojeikere, Development and Marketing Manager, said Airtel Money, the most strategic project of the company, was enriching lives.

Global Access Ends Training for Staff

GASL manager with intructors

By William Yaw Owusu

Accra, Tuesday August 21, 2012

Global Access Savings and Loans (GASL) has ended a five-day programme aimed at training the company’s management and staff to detect fraud in their operations.

The programme was held by Quest Service Limited, a risk management centre, that has trained over 1,500 personnel in the banking and financial sector.

According to Richard Kumadoe, a fraud management consultant, money laundering has become a sophisticated business and it needs well-trained people in the sector to tackle it.

“The truth is that technology has come with all kinds of gadgets and criminals are taking advantage of the situation to perpetrate crime. The banking and financial sectors have to be positioned to withstand fraud.”

He said the operators in the sector must coordinate their efforts to check incidence of money laundering, terrorists financing and other suspicious transactions, adding “we should help to make Ghana and the sub-region a safe haven for financial malfeasance.”

Ama Amoah, Marketing and Public Relations Manager of GASL, said the company was determined to provide its staff with relevant skills and techniques in detecting and reporting what she termed unusual and suspicious transactions that expose the bank to financial loss, increased expenses or reputational risks.

She said the training of the staff also forms part of efforts to assist the bank to “assess the appropriateness and comprehensiveness of the bank’s customer due diligence policies, procedures and practices.”

“We want to provide our staff with the technical know-how in adapting the risk-based approach in the risk assessment processes of specific products, services, customers, entities and geographical locations unique to the bank.”

Ms. Amoah said GASL was determined to build what she called “a bank-wide control environment that adheres to safe and sound practices with regard to the bank’s compliance with statutory and regulatory requirements.”

GASL is the second most patronized money transfer services provider with products including Western Union, Vigo, Money gramm and Sika ye mogya.

Currently they have 14 branches in Accra, Kumasi and intend to expand to other areas of the country by next year.

Ms. Amoah said GASL intend to become a universal bank in five years’ time, stressing that they were putting the necessary measures in place to get there.

91-Day Bill Yield Appreciates

Dr. Kwabena Duffuor, Minister of Finance and Economic Planning

By William Yaw Owusu

Accra, Friday August 17, 2012. 

The Bank of Ghana (BoG) says the yield on its 91-day Bill has risen from 22.80 percent to 22.91 percent since August 9 when the last public sale was effected.

According to BoG, it sold 256.33 million Cedis ($132 million) of the 91-day paper out of a total 324.07 million cedis of bids tendered.

Some financial analysts argued that the rise might be attributed to cost of funds inching higher while others said it is possible the cost of borrowing has gone up.

Increasing interest rate means it is more attractive for people to save in the current climate of a depreciating cedi.

The cedi has been under strain since the beginning of the year as mining and other corporations in the country - a large gold producer and recent oil exporter - incresaed demand for dollar denominated imported goods.

Other experts have blamed the currency weakness on trade with China, as many traders are accumulating actual paper cash in dollars due to the lack of effective transfer channels for the Yuan in Ghana.

Statistics show that the cedi has lost over a third of its value since Ghana began producing oil in November 2010, trading currently at around 1.9115 per dollar.

Renaissance Capital has even predicted depreciation of between 5 to 10 percent by the end of 2012.

The increase in Treasury Bill rate also means that the Central Bank would be able to mop up excess liquidity from the market.

However, businesses cannot borrow, as its too expensive to borrow leading due to the decline in economic activities.

Generally, some analysts believe that the current situation would negatively affect the country’s economy.

Gold Fields' Reopens Mine

By William Yaw Owusu

Accra, Tuesday August 14, 2012

After three weeks of inaction, Gold Fields Ghana Limited has re-opened its Tarkwa gold mine in the Western region.

The mine, where gold is extracted from the ore, was shut down by the Environmental Protection Agency (EPA) on July 16.

It directed that the company’s water discharges be channeled through a treatment plant.

However, bureaucracy at the EPA made it impossible for BUSINESS GUIDE to ascertain whether the regulator had indeed given Gold Fields the green light to re-open the mines.

Gold Fields, the world’s fourth largest bullion producer, said in a statement on Friday that it had commissioned the construction of two water treatment plants to support its operations.

It said it lost around 15,000 ounces or 10 per cent of the mine’s quarterly production as a result of the shutdown known as ‘heap leach facilities.’

Gold Fields currently produces around 850,000 ounces globally each quarter.

“Although Gold Fields believes that Tarkwa was complying with the prescribed conductivity levels in its water discharges, it has nonetheless commissioned the construction of two water treatment plants at the heap leach facilities,” the company said.

Gold Fields, the EPA and the Ministry of Environment, Science and Technology, agreed that Tarkwa would continue diluting and discharging excess water in a controlled manner until the construction of two water treatment plants.

The company, which is expected to complete the construction of the water treatment plants by the end of the year, was required to submit monthly progress reports to the EPA.

It is one of the largest unhedged producers of gold with production of 3.5 million gold equivalent ounces from eight operating mines in Australia, Ghana, Peru and South Africa.

The company was incorporated in Ghana in 1993 as the legal entity holding the Tarkwa concession mining rights.

Gold Fields Ghana Holdings Limited now holds 90 per cent of the issued shares of GFGL after acquiring the indirect 18.9 per cent of the issued shares belonging to IAMGold and its affiliates.

The government of Ghana holds a 10 percent free carried interest, as required under the mining law of Ghana.

The Tarkwa Gold Mine operates under seven mining leases covering a total area of approximately 20,825 hectares.

Mining is currently taking place at six pits, Pepe, Atuabo, Mantraim, Teberebie, Akontansi and Kottraverchy and the mine utilizes a conventional CIL plant as well as a heap leach facility.

In the 12 months ending December 2011, Tarkwa produced 717 koz of gold from the milling and heap leach operations at a cost of US$552/oz.

Biometric Payroll Underway

Dr. Kwabena Duffuor - Minister of Finance & Economic Planning, Ghana. 

By William Yaw Owusu

Accra, Thursday August 9, 2012. 

The government has finally commenced the administration of a new payroll system under which only public servants whose biometric data have been taken would be paid salaries.

In 2010, the government, through the Controller & Accountant General’s Department (CAGD), decided to obtain the biometric information of all public servants as part of process of improving payroll management in Ghana but the gathering of data took effect in April 2012.

So far, biometric information on active workers in the Greater Accra, Ashanti, Central, Eastern, Western and Volta Regions have been concluded.

Although, the public workers in the above-mentioned regions have been captured there are several complaints from public worker who are yet to be captured under the project in the regions.

A news release issued in Accra titled: ‘Payment of July 2012 Salaries to Public Servants on Controller & Accountant General’s Mechanised Payroll’ and signed by Enoch H. Cobbinah, Chief Director of the Ministry on behalf of the sector Minister, said the CAGD was using biometric data captured as at July 18 for July’s salary.

“The payroll biometric information gathered on public servants on the CAGD’s mechanised payroll as at July 18, 2012  in the above named six regions was used for the payment of salaries for July 2012 public servants on the mechanised payroll from the six regions.”

“We, however, wish to assure genuine public servants who may not have taken part in the biometric registration exercise, and therefore, have not received their salaries for July, that payment will be duly made to them.”

The release said “such public servants are, therefore, encouraged to quickly go to the nearest Regional Office of the Controller & Accountant General’s Department or to the Ministry of Finance and Economic Planning, Annex (FIC Building), Accra where they will be immediately registered and their payment quickly processed.”

It said after registration, public servant should submit the registration form that will be given to him/her by the registration officer to the Regional Director of the Controller & Accountant General’s Department or the Director in charge of Salaries at the Treasury Headquarters for immediate processing and issuing of cheque based on the June, 2012 net salary of the employee.

The release concluded that biometric registration for public servants in Brong Ahafo, Northern, Upper East and Upper West Regions has commenced and information captured would be used for payment of salaries for the month of August.

“Public servants in these four regions are being encouraged to present themselves for registration at venue as advertised in the media.”

Amissah-Arthur Defends Economy

Paa Kwesi Bekoe Amissah-Arthur

By William Yaw Owusu

Accra, Tuesday August 7, 2012.

In spite of widespread complaints that there is high cost of living in the country, the Vice Presidential nominee and Governor of the Bank of Ghana (BoG) Paa Kwesi Bekoe Amissah-Arthur says the general prices of goods and services have not risen.

“For the first time in the history of this country, for 24 months, inflation has been single digit. It means that pensioners and people who rely on fixed income are not as worse off as it would be in a situation where inflation was in double digit. So you can have particular prices but the general level of prices has not risen to the extent that we know in this country.”

Appearing before the Appointments Committee of Parliament in Accra yesterday, the out-going Governor said “the point is that while we are not very happy with some of the developments, the general thrust of economic development is good and I think we have to recognize that.”

Mr. Amissah Arthur whose nomination was made possible following the elevation of the incumbent John Dramani Mahama to the position of President after the death of President John Evans Atta Mills on July 24, defended the government’s economic management style and but admitted that prices were rising albeit at a slower rate.

He admitted that the Cedi depreciates especially during election years and said the currency’s performance in election years was recorded in 2004 and somewhat in 2008 adding “in 2012 we have had substantial depreciation.”

“It’s an election year and the Cedi has depreciated. We have had a growth in import level that is unprecedented in just one year. That has affected us in a way. It hasn’t been worse than this. Despite that we have only had 17% of depreciation during the course of the year.”

“There is a greater danger of fiscal excess so people take pre-emptive measures. We have had a huge increase in import this year so we have had pressure on the cedi. In May we had more than 5%, but in June it was 3%. We are expecting that this will continue to the rest of the year.”

As you may know, the level of imports into Ghana doubled, oil imports tripled and that put immense pressure on the foreign exchange resources and we had to do things in order to stabilize the situation.

Mr. Amissah-Arthur said what has come to be known as the dolarisation of the economy needs frank assessment of the situation to ensure that there is amicable solution to the problem.

“Ghana has one currency called the GH¢. In previous times, in order to create confident in the economy, governments have allowed people to hold deposits in dollars. In many countries you cannot go to the bank and take dollars across the counter.”

He said “we became very liberal and allowed the people to this. What we found was that there were many instances where people went to the banks and sometimes wanted to take as much as a half a million dollars across the counter. For anti-money laundering considerations, we thought that this should not be encouraged.”

He said the central bank as a result put a limit of $10,000 on the amount of foreign exchange that one could take from Ghana adding “We think that we must reverse this situation.”

Mr. Amissah-Arthur, commenting on the common currency (ECO) for the sub-region said Ghana has performed well in especially the last two years, achieving two out of the three main points in attaining the convergence criteria.

He cautioned ECOWAS to be careful in designing the common currency since the Europeans were grappling with how to control their common currency in wake of the Eurozone crisis.

He also said he was not in favour of taking separating the supervisory and monetary functions of the central bank because events in Europe had shown that consolidating all the functions under one umbrella body had helped to check financial irresponsibility.

Time Wasting Impedes Economic Growth - Insurer

By William Yaw Owusu

Accra, Tuesday August 7, 2012.

The attitude of the Ghanaian towards time, which has brought dire economic consequences, was heavily criticized by an insurance expert at a book launch in Accra last Friday.

George Kojo Addison, Managing Director of Star Life Assurance Company Limited, noted that the cost of time wasting among Ghanaians, both official and unofficial, had led to underdevelopment in the country.

Mr Addison, who launched his book titled: ‘Standing out,’ said “time wasting especially in public institutions has derailed the effort to bring economic growth for the country.”

“There is vast difference when it comes to timekeeping in Ghana and other countries. We have to change our attitude towards time otherwise we can never achieve the development that we so much desire.”

He said “time wasting culture motivated me to write this book because there are many things we do that impact negatively on our economy.”

Mr. Addison said after 55 years of independence, Ghana should have put in place sound economic policies to create wealth for the people but negative work attitude had not made it possible for that to happen.

“We take things for granted in this country and we cannot continue to grow in this situation.”

He said his book is designed to challenge individuals to adopt “positive attitude towards the development of the country.

Albert Ocran, a motivational speaker and Chairman of Legacy & Legacy, challenged the youth to venture into writing, saying “you cannot be too young to be desirous of leaving a legacy.”

He said the book is a legacy for Ghana and Africa and it challenges readers to be “excellent.”

Frank Oppong-Yeboah, Executive Vice Chairman of Star Life Assurance Company Limited, who chaired the function, said the contribution of the author in the insurance sector was immense.

Amissah-Arthur Speaks On Cedi Free-Fall

Paa Kwesi Bekoe Amissah-Arthur, Vice Presidential nominee

By William Yaw Owusu

Accra, Monday August 6, 2012.

The Vice Presidential nominee and current Governor of the Bank of Ghana (BoG), Paa Kwesi Bekoe Amissah-Arthur says the free-fall of the Cedi against major foreign currencies “is not untypical.”

He told an Accra-based radio station that “I think that we have done quite tremendous work in stabilizing the Cedi as it is. As of now we are talking something like 17% depreciation year to date which, in an election year is not untypical.”

Mr. Amissah-Arthur, who is expected to be vetted in parliament vetting today for the post of Vice President, said as governor, his priority had been to stabilise the economy.

He said some of the policies introduced under his supervision had brought the needed economic stabilisation.

The Vice Presidential nominee admitted the depreciation of the Cedi had start “much earlier” this year than in previous election years and also said he was aware that the development was going to be an election debate.

“The problem this year was that it started much earlier than in previous elections years and the political business cycle has been used as an explanation for some of the things that are happening.” 

He said, “I know that the record of the cedi will be an issue in this election but every election year in this country, from 1992 to date, the cedi has destabilized.”

“Really if you look at the data, this is the year where it has been lowest. In other years there has been a 60% depreciation, a 40% depreciation in an election year. So we have learnt lessons from those depreciations and not all of them are economic factors.”

The daily depreciation of the Ghana cedi against major currencies has become a headache for economic managers of the country.

Statistics show that the cedi has lost over a third of its value since Ghana began producing oil in November 2010, trading currently at around 1.95 and 2.0 per dollar.

The cedi, which from January to June 2009 suffered a rapid monthly depreciation of about 3 percent, slowed down considerably to 0.9 percent in July 2009. It bounced back in mid 2010 and remained relatively strong for some time. However, since January 2012, it has continued to depreciate against the major currencies.

While some analysts attributed the decline to the surging demand for the dollar and other currencies by both local and foreign investors, and businesses mainly to cover import bills others have blamed the currency weakness on trade with China, as many traders are accumulating actual paper cash in dollars due to the lack of effective transfer channels for the Yuan in Ghana.

Renaissance Capital has even predicted another 5% to 10% depreciation this year (the end of 2012).

To stem the situation, the central bank raised interest rates by 250 basis points, starting from February, to halt the currency from further weakening but critics of the government said the measures put in place to stem the tide not functional.