Usage of net reserves will cause cedi’s drop – Ato Forson cautions BoG

Depletion of reserves will scare investors

BoG’s efforts not enough cushion for the economy, Ato Forson

Finance Minister to speak on economy

Ranking Member on the Finance Committee in Parliament, Dr. Cassiel Ato Forson, has indicated that if the Bank of Ghana attempts to use its net reserves to cushion consumers with the present state of the economy, it will be disastrous.

He stated that this will be a “disaster staring in the face of the country”.

In a Joy News interview, Dr. Ato Forson stated that this will be a bad decision because depletion of the reserves will result in a huge drop in the country’s currency.

“When the investors are to see that the reserves keep going down, then they would be rushing to exit and if they exit and obviously the currency is going to drop and drop and drop until it falls. That is what I’m worried about,” he said.

The Monetary Policy Committee of the Bank of Ghana has reviewed the monetary policy rate from 14.5% to 17%, the first time since November 2018 that the rate has gone up so high.

This has become necessary as the cedi keeps depreciating against major trading currencies.

Ato Forson however noted that the Central Bank’s interventions will not be enough to cushion consumers, given the current stance of the economy.

“They could have given some hope to investors. Today, we are losing reserves at a very alarming rate. My only concern is that the package that the central bank has actually provided will not be enough in the sense that the problem, the concerns of the investors who are actually repatriating and taking their money away, are actually because of the fiscal situation. So, I want to see what the fiscal authorities will do and as to whether that information would be enough for the market to respond appropriately or not,” he added.

Finance Minister, Ken Ofori-Atta, is however expected to address the nation this week to communicate key measures taken by the government amid the current challenges.