The Minority in Parliament has urged the government to adhere to fiscal consolidation and curtail excessive spending.

Reining in increased unbudgeted fiscal spending, it said, would prevent the excessive demand for foreign exchange. “Our cedi is depreciating because the government is on an expenditure spree, spending money as if there is no tomorrow,” he alleged.

Addressing journalists in Parliament yesterday on the free fall of the cedi against major foreign currencies, the Minority Leader, Dr Cassiel Ato Forson, said, “As we speak, we are aware that they are awarding contracts in billions of US dollars without budgetary and parliamentary approval.

Dr Forson, who is also the National Democratic Congress (NDC) Member of Parliament for Ajumako-Enyan-Esiam in the Central Region, said checks by the Minority at commercial banks, forex bureaus and businesses suggested a number of reasons for the free fall of the cedi.

He mentioned what he described as the strange policy on mixed cash reserve ratios recently implemented by the Bank of Ghana and increased unbudgeted fiscal spending which is fuelling demand for foreign exchange.

Others, he said, were lack of confidence in the banking sector, resulting in currency substitution, lower cocoa production, resulting in lowest exports in two decades due to the mismanagement of the sector as well as uncontrolled corruption in the Akufo-Addo/Bawumia government.

 BoG to blame

Highlighting a number of factors triggering the depreciation of the cedi, the Minority Leader blamed the Bank of Ghana (BoG) for being partly responsible for the debacle. He recalled the impact of the printing of 100 and 200 cedi notes as well as excessive printing of money to finance the bloated expenditure of the Akufo-Addo/Bawumia government without parliamentary approval.

At the same time, he said the BoG engaged in multiple currency practice by maintaining segmented markets for foreign exchange. “These, together, contributed to pressure on the exchange rate and fuelled inflation,” he said.

Exposed credentials

In spite of the huge inflows of foreign exchange from the International Monetary Fund and the World Bank into the Ghanaian economy, Dr Forson said the government’s actions and its management of the cedi had continued to fuel steep depreciation with no end in sight.

“So far, the decisions of the Economic Management Team chaired by Vice President Alhaji Bawumia leaves a lot to be desired.

Increased prices

The leader noted that the steep depreciation of the cedi had resulted in increase in the prices of goods and services as several businesses continued to revise prices upwards. This development would further worsen the plight of the already suffering Ghanaian, he explained.

“It is even more worrying and depressing to see constant media reports of escalating prices of goods and services as a result of traders’ inability to service their loans and restock due to the rapid fall of the cedi.

“At this point, traders, especially importers, require more money to buy or import the same quantity of items that they could have previously purchased with less money,” he said.