Although Dr Mahamudu Bawumia has been touted as the best economist the country can trust, especially in New Party research and patriotic NPP, to stabilize the cedi against the US dollar while they were still in opposition.
Today, the dollar continues to soar as Dr. Bawumia, who made so many comforting promises, leads the government's economic management team. Many, therefore, wonder what could be the cause of the poor performance. Revealing the cause, Sekondi Constituency MP Andrew Egyapa Mercer said the Cedi's poor performance is a result of the recent downgrading of the economy by some rating agencies.
He, however, said government initiatives are underway with the Bank of Ghana (BoG) to change the narrative by strengthening the Cedi. Currently, the Ghana cedi is known to trade at over 7 cedi per dollar and is also expected to exceed 8 cedi soon.
According to the Deputy Minister of Energy, the cedi is depreciating faster due to the downgrading of rating agencies and some speculation from those who fight for the dollar. But they are working intensively with the Bank of Ghana to resolve the issue.
Not so long ago, Moody's Investors Service (Moody's) downgraded the rating of long-term issuer and senior unsecured Ghanaian government debt to Caa1 from B3 and changed the outlook from negative to stable. The downgrade to Caa1, according to Moody's, reflected the increasingly difficult task facing the government in addressing its liquidity and debt challenges.
Weak revenue generation limits the government's fiscal flexibility, and tight financing conditions in international markets have forced the government to rely on costly short-term debt. Moody's has estimated that interest payments will absorb more than half of government revenue for the foreseeable future, an exceptionally high value compared to peers across all ratings.
To address this, the government has proposed strong fiscal consolidation and a move to borrow from external partners on more favorable terms. For more details on current events in Ghana and beyond, follow this page. Thank you.
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