The depreciation of the Ghanaian Cedi has significantly impacted the country’s economic landscape, leading to labour agitations, the collapse of some businesses, and the relocation of others to more business-friendly countries.
This is according to the Institute of Statistical, Social and Economic Research (ISSER) in its 2024 Mid-Year Budget Review, titled “A Critical Assessment of the 2024 Mid-Year Budget by ISSER.”
The report highlights that in the first half of 2024, the Cedi depreciated by 18.6% against the US dollar, 17.9% against the Pound Sterling, and 16.0% against the Euro.
This follows a depreciation of 27.8%, 31.9%, and 30.3% against the US dollar, Pound Sterling, and Euro respectively in 2023, and 30.0%, 21.2%, and 25.3% against the same currencies in 2022.
These figures suggest a degree of stabilization in the exchange rate over the past three years, despite the Cedi being more volatile in the first half of 2024 compared to the same period last year.
ISSER noted, “It must be reiterated that the high exchange rate in Ghana has partly contributed to labour agitations, high cost of doing business, and the collapse of some businesses while others relocated to more business-friendly countries.”
The report calls for urgent government intervention to curb the rate of depreciation against major trading currencies and to boost exports to reduce the demand for trade forex.
ISSER recommends, “The recent policies by the central bank to enforce the forex regulations, in addition to having increased presence on the exchange rate market, should be intensified.”
ISSER’s assessment underscores the need for robust economic policies to address the adverse effects of currency depreciation.
Reducing the exchange rate volatility is essential for creating a stable business environment, encouraging investment, and mitigating the economic pressures that lead to labour unrest and business relocations.
Myjoyonline.com