Cedi depreciation committee exposes BoG’s ineptitude – Economist

The setting up of the Cedi Depreciation Committee by the government is problematic and also a sign of currency management failure by the Bank of Ghana (BoG), economist Prof John Gatsi has said.

“The government's failure to follow the clear procedures provided in articles 183 and 184 regarding currency management in Ghana makes any FX Committee, which is not set up by Parliament, problematic and also signals currency management failure by the BoG”, the Financial Consultant asserts.

In an article, the Head of Business School at the University of Cape Coast said the management of the local currency, including investigations into the depreciation of the local currency, is the constitutional mandate of the central bank.

In article 183 (2)(a) of the Constitution, the BoG is mandated to promote and maintain the stability of the currency in the interest of economic management and progress of Ghana. Also, it is only the BoG that can disallow any forex exchange transactions.

In the spirit of the above provisions, Prof Gatsi stated that the Committee set up to do the same work is alien to the Constitution of Ghana and portrays the Bank of Ghana as lacking what it takes to manage the currency to foster the economic progress of Ghana.

He emphasised that the central bank is, however, capable of effectively delivering on its mandate if the government aligns its policy decisions with the advice of the BoG, especially, relating to fiscal policy, including huge borrowings and the interest cost burden, adding there must be a conscious coordination between the path of the government and the BoG.

Continuing, Prof Gatsi said currency development requires critical adherence to article 184 of the Constitution, in which the BoG is required to present the report on currency management to the Finance Committee of Parliament for Parliament to monitor forex developments and play a beneficial oversight role in currency management in Ghana.

The Constitution also requires the BoG to present a semi-annual report to Parliament, on one hand, and currency management report to the Auditor-General, which will then be presented to Parliament for debate.

He noted that the layman's understanding of debate, in this context, is that it is an open discussion about the currency based on a report from BoG.

“The question now arising is: how many times, in the past two years, has Parliament received this important report and debated on currency developments to ensure the progress of Ghana?”