Much has been said about the current direction at which the Ghanaian economy is headed and the subsequent birth of Senchi consensus at the just ended National Economic Forum, believe the Ghanaian government can adopt the policy of fixed exchange rate.
In my opinion, exchange rates should be monitored or a fixed exchange rate system may be needed to make sure that they move in the right direction. Another advantage of fixed exchange rates is that it allows external observers to identify deliberate actions by the authorities especially government economic team. This allows the IMF to use the surveillance mechanism to discuss the issue with the authorities and to reduce damaging actions for the economy. Moreover, exchange rate stability is helpful for fiscal policy effectiveness.
However, the fixed exchange rate has to be used carefully because maintaining the fixed exchange rate could mean a high interest rate and a resultant slowdown in economic growth and job creation. It is believed that fixed rate cannot remain for long. A system of fixed exchange rate should have two requirements. One is credible, and another is price stability.
It also should be noted that different countries are affected in different ways and have different capacities to weather the shocks. Yet, the most important thing is to understand that exchange rate can be used to alleviate the Ghanaian crisis.
I think that if a system of fixed exchange rate is used properly to reduce the economic volatility, this should be helpful to provide safeguards against ethical lapses or loopholes
By: Lt.Sayibu Jabil
USA FORSCOM