Managing Editor of the Insight newspaper, Kwesi Pratt Jnr. has predicted that the cedi will start depreciating again, reaching Gh¢8 per dollar in the next 4 to 5 months, in spite of the $800 million dollars Euro-bond injected into the economy.
He explained that over the last 36 years, anytime the cedi depreciates, successive governments had used the same method of borrowing to shore up the local currency, culminating in the stability of the cedi for a brief period, mostly 5 months; then it begins to depreciate again.
Thus, the $800 million dollar Euro-bond that the Finance Minister, Ken Ofori-Atta recently negotiated, is "not something new".
Contributing to Radio Gold's 'Alhaji and Alhaji' programme, Kwesi Pratt was of the firm belief that measures being implemented by the Akufo-Addo government to solve the depreciation of the cedi is cosmetic.
"I will not be surprised even in the matter of 2 to 3 weeks, the cedi stabilizes around 4.8 or 4.9 to 5 to a dollar; it is going to happen, no doubt, in the next 3 to 4 weeks. But mark it, in 4 to 5 months time, the cedi will ferociously start depreciating and by the time we wake up, the cedi will be heading towards Gh¢8 to a dollar very soon," he forewarned.
He reiterated that the government will definitely pay back the loan which was used to stabilize the cedi with interest, and the condition of the economy will be worse.
"Your cedi is not doing well, all you do is borrow and pump into the economy to get the appearance of stability. Won't you be paying the monies you borrow back? When you begin to take $800 million dollars out of your economy to pay for the money you are using to stabilize the cedi, what will happen to the cedi again?" he quizzed.
He therefore opined that "if stabilizing the cedi by injecting foreign exchange into the economy is worth celebrating, we should have started our parties 36 years ago. I recall during the days of late Prof. Mills, when Dr. Duffuor was the Finance Minister, the same method was used and nobody organised any party."
"....as we are foolishly announcing to the currencies speculators that we are going to pump $800 million into the economy to stabilize the cedi . . . they are zooming in on us like flies and in a maximum of 4 months, currencies speculators will scoop all the $800 million dollars out of the Ghanaian economy because they are always watching to see where it is cheaper to buy foreign Currencies to maximize their profits . . . all these Mallams and Alhajis who are the Sheikhs of currencies speculations will become fabulously rich and the cedi will start to depreciate again," he added.
He therefore described as a complete 'waste of time and resources', the $800 million Euro bond capital injection into the economy by the Finance Minister in an attempt to stabilize the cedi; emphasizing that such a measure will not work.
The government, last week, raised $3 billion from international financial institutions through a three-tranched Eurobond which attracted more bids than the country asked for.
At the close of a roadshow in London, the appetite for the 2019 sovereign bond had swelled, resulting in orders totaling $21 billion – about seven times more than the amount needed.
The government delegation, led by the Minister of Finance, Mr Ken Ofori-Atta, however, accepted only $3 billion, in consonance with the amount budgeted for and approved in the 2019 Budget Statement and Economic Policy of the government.
|Disclaimer: Opinions expressed here are those of the writers and do not reflect those of Peacefmonline.com. Peacefmonline.com accepts no responsibility legal or otherwise for their accuracy of content. Please report any inappropriate content to us, and we will evaluate it as a matter of priority.|