Finance Minister, Seth Terkper, has acknowledged that despite the cedi’s relative stability this year, stronger measures, beyond the sale of external dollar debt, are required to shore up local dollar supply, and bolster the local currency.
“We can’t continue to borrow to sustain the currency. I do believe that we have to look at value addition export that will bring in needed forex to help sustain the strength of the local currency,” Mr. Terkper said.
Last year the country’s total exports amounted to US$10.35 billion, whereas imports yielded US$10.46 billion, leaving a trade balance of US$3.1 billion.
The Minister said government’s intention to shore up export revenue led to the establishment of the Export-Import (Exim) Bank, which will go a long way to boost exports, and in turn provide needed forex to stabilise the local currency.
The Exim bank, he said, can help stabilise the cedi via its low interest rates and its potential to entice exporters to export more.
“The solution is an EXIM bank that provides guarantees and loans at reasonable rates. That is what COCOBOD does to support local farmers, and so we have to develop other institutions to do the same. That is the EXIM bank strategy,” he said at a breakfast meeting organised by Graphic Business, in collaboration with Stanbic Bank.
The cedi has, so far, this year depreciated by 4.3 percent against the dollar, which is seen as a marked improvement on its performance in 2015 and 2014, when it dipped by 17 percent and 30.9 percent respectively.
The perennial weaknesses have largely been attributed to the fact that the country has remained import-dependent, which drives up dollar demand on the market.
This year, however, a combination of measures, including the US$918million IMF bailout programme, a US$1.8 billion cocoa syndicated loan, a US$750 million Eurobond and the central bank’s tightening of monetary policy, has helped arrest the cedi’s slide somewhat, giving it one of its best performances in the last five years.
Whilst underlining the necessity of other measures, the Finance Minister said although the Eurobond is to service external debts, when the proceeds are used to finance cedi denominated projects, the cedi benefits from the extra dollar supply.
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