Professor Peter Quartey, Head of the Economic Division at the Institute for Statistical, Social and Economic Research, on Tuesday called for the Bank of Ghana to regulate foreign currency black-market transactions.
He said the measure would ensure that anybody who transacts business through exchange of currency leaves records for the Bank to track and know how much the country is getting out of the system.
Prof. Quartey was speaking at this year’s edition of the Graphic Business/Stanbic Bank Breakfast Meeting in Accra, on the theme ‘Achieving Sustainable Exchange Rate Stability: Our Options’.
The quarterly meeting is to help stimulate intellectual discourse on pertinent issues affecting national development.
He said: “At the moment, I do not think we are effectively doing anything in that regard to regulate them”.
On depreciation of the cedi, Prof Quartey said the Bank of Ghana needs to strengthen macroeconomic fundamentals like the real Gross Domestic Product growth, fiscal deficit, inflation and debt.
He said: “An effective management of short-term spikes and slippers is important, along with sustained efforts to address medium- to long-term structural bottlenecks of the real sector”.
He also suggested the facilitation of transactional trade between Ghana and China through the central banks – describing this as important.
Dr. Ernest Addison, Governor of the Bank of Ghana, said the country had chosen a flexible exchange regime, and this has helped in terms of growth performance over the years.
He said there is a need to improve the local content in some of leading sectors of the economy, such as the oil and the gold mining sectors, in order to advance performance of the currency.
He said the strong policy reforms in the last 24 months were a complementary monetary policy coupled with financial sector reforms which are yielding expected results – adding that “those were issues of the country’s economic fundamentals”.
He said for the country to deal with bias against the cedi, there is a need to deliberately increase exports and reduce imports of goods to ensure sustainable stability for the currency.
He said: “So long as we remain import-dependent, we will have a bias of the currency losing its value over time”.
The Governor said there is a need for the inclusion of micro and macroeconomics factors when running fiscal and monetary policies, which also has an impact on the behaviour of exchange rates.
He said although it is important to be a recipient of sovereign bonds, they should be used to finance capital projects rather than being used to finance current expenditure.
Dr. Joseph Obeng, President of the Ghana Union of Traders Association (GUTA), said the union has initiated the ‘income in income out’ policy to help boost exports.
He said depreciation of the cedi negatively impacts businesses in the country as it reduces profit margins, adding that: “Increase in exports is the surest way out”.
Dr. Obeng said the depreciation does not encourage the stabilisation of prices, making it likely Ghanaian traders will lose out to competition in the market.