Vice President Dr Mahamudu Bawumia has given explanations to what he meant by ‘arresting the cedi depreciation’ in the run-up to the 2016 December polls.
Dr Bawumia then the Vice Presidential Candidate of the New Patriotic Party (NPP) accused the erstwhile NDC administration of mismanaging the economy translating into weak economic fundamentals.
Upon assuming office and having enjoyed a period of stability in the depreciation of the cedi, Dr Bawumia is on record to have said the NPP government had ‘arrested’ the ‘runaway cedi depreciation’ and given the keys to the Inspector-General of Police.
But after the short period of stability, the cedi begun to once again depreciate, making Ghanaians particularly the NDC question Dr Bawumia’s assertion of having ‘arrested’ the ‘runaway cedi depreciation’
However, speaking in an interview on an Accra-based Peace FM, the Vice President noted that his assertion was not to mean that the depreciation of the cedi would be permanently halted and the exchange rate fixed.
Dr Bawumia noted that Ghana runs a flexible rate regime and not a fixed rate regime, and in view of that the exchange rate was determined by market forces.
Speaking further, he intimated that the rate of the cedi depreciation had been halved as the depreciation is averaging around 8 per cent compared to the 18 per cent under the erstwhile John Mahama administration.
“We run a flexible exchange rate regime so exchange rate will move according to market forces but fundamentally if you have a higher inflation you will have a higher exchange rate and vice versa. So when we say we are going to arrest the cedi we are not saying we are going to fix the exchange rate at a place but rather reduce inflation to correspond to it,” he posited.
“As at now we have reduced the rate of cedi depreciation by 50 per cent, under Mahama cedi depreciation was 18 per cent but on average we are doing 8 per cent. And this is because we have reduced inflation and it is reflecting in the exchange rate,” he added.