Using natural resources to control cedi depreciation will have minimal impact – Economist

Professor Lord Mensah, an Economist at the University of Ghana, Legon, has expressed scepticism about the effectiveness of using the country’s natural resources to back the cedi.

According to him, the impact on the Ghana cedis will be minimal.

This comes after the Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye, called on the government to consider methods of acquiring full ownership of Ghana’s natural resources to utilize them to back the cedi to fortify its value.

During an interview on Eyewitness News on Citi FM with Selorm Adonoo, Prof. Mensah referenced the government’s gold for oil policy, questioning its impact on the cedi’s value.

“With or without the Gold for Oil policy, we will still be having the cedi depreciation. We need to ask ourselves what is the component of the exchange rate demand when it comes to oil and then neutralising it with gold. And again, gold price on the global market is stable, that is what we need to appreciate, so, respectively, we were trying to use natural resources to control the dollar but its impact I can tell you is very minimal,” he stated. 

Prof. Mensah also pointed out the underlying issues of political will and discipline as contributing factors to the economic challenges.

“As we have the association of rice importers go and ask them, some of them are in parliament as we speak. So, at the end of the day, it has to do with the lack of political will and also the discipline and commitment to ensure that we solve the problem in the country. Because you may think that you are benefiting from the depreciation of the cedis because you are importing but indirectly one way or the other, you are reducing your capital,” he stated. 

 

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