Rise of the cedi: NPP administration can take some credit – Bokpin

A Professor of Finance at the University of Ghana Business School, Godfred Bokpin, has said that the erstwhile New Patriotic Party (NPP) administration can claim some credit for the current appreciation in the value of the cedi against major currencies, especially the dollar.

He said, the Bank of Ghana, under the leadership of Dr Ernest Addison built enough gold reserves to cushion the cedi, which they handed over to the ruling National Democratic Congress (NDC) government.

“My position is that yes, part of the strengthening of the we are seeing now was also inherited from the previous administration. If you look at the aggressive nature with which the previous administration built reserves, it was quite good. That has allowed some degree of freedom for the market to witness the kind of inflows we are seeing now from the supply side,” he said while contributing to discussions on TV3’s KeyPoints.

The topic under discussion was, “who takes credit for the rise of the cedi?”

The topic was engendered by the debate between the two parties over who should be credited with the gains made by the cedi. As of May 24, the exchange rate was GHC11 to $1. A drop from GHC15 to $1 at the beginning of the year.

While the government and its officials have attributed the gains being made by the cedi to deliberate policies, the leadership of the New Patriotic Party (NPP) are taking credit for the positive development. They contend that it is due to policies implemented during their administration as the National Democratic Congress (NDC) government has been in office for barely five months.

Commenting on the debate, Prof Bokpin noted that, “If the previous government wanted to push down the exchange rate, they had that leverage. Ahead of the election, some of us thought that the central bank will interfere in the market and drag the rate down, more for political expediency because they had the reserves. They had exceeded the IMF target and all that. I think that there was good leadership in how they managed the transition- preserved the reserves and handed over to the incoming administration and they also built on that. So, ultimately, it is Ghana that has won.

Read also: Rise of the Cedi: You can see leadership and painful choices – Bokpin explains

 

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