Cedi Redenomination Affected Economy – Akosa

A former Director General of the Ghana Health Service, Prof. Agyeman Badu Akosa, has also blamed the 2007 redenomination for the country’s current economic challenges. According to him, Ghana failed to sort out the fundamentals before the exercise was carried out. “I think that the reality of the situation is that if you don’t fix the fundamentals of your economy you cannot under any circumstances guarantee the stability of your currency,’’ he said. Professor Badu Akosa added that ‘’the micro underpins the macro and if the micro is wrong, the macro cannot be right.” Speaking on the Citi Breakfast Show, Prof. Akosa also stated that government has not done enough to reduce its spending. He noted that reducing one ministry is not enough to cut down government size. “…We can cut government size radically; I think that reduction of one ministry for me just doesn’t satisfy me. We can prune down serious government spending,’’ he said. Prof. Akosa further stated that he expects the legislature like the executive to reduce salaries. “We have a legislature that somehow believes that because they make the laws they write themselves into every law in this country; anything that comes at a statutory reduction they must get a certain bit of it…,” he opined. He concluded that until that is done organized labour cannot be held to account. A senior Economist at the Institute of Economic Affairs (IEA), Dr. J. K Kwakye on Tuesday attributed Ghana’s challenge of controlling inflation to the redenomination of the cedi. Dr. Kwakye made the comments while delivering the IEA’s 2014 mid-year economic review of the country. He said the decision to redenominate the cedi was rather politically motivated. He attributed the decision to government’s intention to “create the impression that Ghana’s currency is of a very high value.” “Government’s intent to make the cedi stronger at that time was an illusion,” he stated.