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BoG intervention saved the cedi – Minority

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Adnan Adams Mohammed
Cassiel Ato Forson, has insisted that the Bank of Ghana (BoG) used the country’s foreign reserves to shore up the depreciating cedi in 2018 and 2019.

The figures on the BoG’s website contradict the Vice President’s presentation at the Town Hall Meeting. The Minority Spokesperson on Finance has said, the BoG figures show clearly that Ghana’s reserves were used to shore up the cedi.

Displaying data from the BoG website, Mr Forson who is also a former deputy Finance Minister said “as at December 2018 and January 2019, the Net International Reserves were GHȻ 3.8 billion…from GHȻ 3.8 billion, it reduced to GHȻ3.173 billion.

“It shows clearly that an amount of GHȻ700 million and over was used for the purposes of intervening in the currency depreciation,” he added.

The beginning of 2019 was characterised by a sudden sharp depreciation of the cedi. Within a week, the cedi went up to close to 5.9 to the dollar.

The cedi has, however, appreciated to about 5.2 as of last week.

Dr Mahamadu Bawumia at the Town Hall Meeting while disputing the NDC’s claim said, the notion that the BoG used the reserves to reverse the cedi “would not be wise.”

“The reason for the sharp reversal of the cedi depreciation that we observed was that the market corrected itself. Investor sentiments, expectations, and uncertainties acknowledged that the fundamentals are much stronger than they suspected and even without the IMF fiscal and monetary discipline are assured.”

Dr Bawumia added that the BoG could not have used the reserves because as part of the IMF requirements for the conclusion of its programme, the Central Bank had to increase its net international reserves by December 2018 and that was done.

“To increase the net international reserves to about $800million, however, meant that the Bank of Ghana could not sell any foreign exchange in the market, they had to essentially hold their hands back and could not intervene in the market during this particular period,” the Vice President added.

But Mr Forson questioned why the reserves have reduced if it was not used to save the depreciating cedi.

“If he is saying he [DrBawumia] did not use the money for the purposes of intervention he should tell us where the money is.

“I know they used it for the purposes of intervention and data does not lie. He is actually lying to all of us and his credibility has now been brought to question,” he said.

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