Here is how cedi's gains can affect imports and jobs - Professor Bokpin
Professor Godfred Bokpin is a Economist
An economist professor at the University of Ghana of Business School, Professor Godfred Bokpin, has highlighted the implications of the cedi’s appreciation on the broader economy.
According to him, while the recent gains of the cedi are commendable, they could have unintended consequences if not carefully managed, particularly by making imports cheaper and undermining local production.
He warned that such a development could negatively impact job creation and the domestic economy.
“If the consideration is that we can drive down inflation to the end-of-year target, and we can’t get that done from the supply end because the economy’s supply capacity is severely constrained, then I would not support strengthening the currency in the manner it is currently being done,” he was quoted by MyJoyOnline.com.
Professor Bokpin noted that the appreciation of the cedi appears to be driven more by policy than by market forces.
He praised the government and the Minister for Finance for the fiscal consolidation efforts being implemented.
“It’s not a blip. And again, there are concerns about sustainability. There’s a reason for what is happening. From the fiscal side, you can see discipline. The government is not spending. Imports are very low. That means the economy’s cash absorption capacity is restricted, and demand is subdued,” he said.
Professor Bokpin commended the coordination between the Ministry of Finance and the Bank of Ghana, describing their efforts as focused and aligned.
“I want to commend the Minister for Finance and the Governor of the Bank of Ghana. There is coordination happening toward a common goal,” he stated.
However, he reiterated the potential downsides of a strengthening cedi if not balanced with policies that support domestic production.
“When you drive down the exchange rate, it only makes imports cheaper. If we were promoting an import-oriented economy, I’d say go for it. But that strategy does not create jobs.”
He cited recent data trends showing that local producers are already being adversely affected.
“Since November 2023, inflation on locally produced items has been higher than imported inflation. That means it’s more economical to import goods, even after paying all the duties at the port, than to produce them locally.”
SSD/MA
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