The cedi’s rate of depreciation is “scary”, and until the government is able to get the situation under control the talks about fiscal consolidation will not see fulfilment, Prof. Eric Osei-Assibey, senior lecturer in the Department of Economics, University of Ghana, has warned.
Speaking at a budget review forum organised by the Chartered Institute of Supply Chain Management (CISCM) for its professionals in Accra, he indicated that the cedi–depreciation could block the realisation of key targets in the 2020 budget.
He said: “The realisation of macroeconomic targets will be hinged largely on the ability of government to control the depreciation of the cedi.
“That will have ripple-effects on all the other indicators because a depreciating cedi could drive up inflation, which will, in turn, lead to high cost of borrowing and a rise in debt stock. All of these are a threat to keeping the fiscal deficit within the target.”
The economist was however upbeat about the strategic pillars that government intends to rest on to grow the economy; which includes intensifying the drive for FDIs; intensive investment in development infrastructure; and creating a competitive business environment through access to affordable credit.
“There is a very substantial savings gap that tends to constrain our ability to invest in critical developmental projects and be able to close that space; there is a need to be able to attract more FDIs that will drive investments to critical sectors of the economy.
by: Naa Anyema