Isaac Adongo, the deputy leading member of the Finance Committee, has questioned the viability and efficacy of the steps taken by the Bank of Ghana (BoG) to address the cedi’s decline versus the US dollar.
He claims that despite the Central Bank’s quotes of lower interbank rates, the business community finds it difficult to obtain dollars at such prices because of the lack of supply.
Speaking on President Akufo-Addo’s initiatives to stop the cedi’s depreciation and put the economy back on track, Mr. Adongo claimed that the dollar is actually in the hands of undercover traders known as “Abochis.”
“You have over 70 billion that do not belong to the economy chasing the dollar. So the dollar will definitely collapse the cedi and that is caused by the Bank of Ghana.
“When you do that then you need to mop up the excess liquidity. You need to find a way to get that money back to the banking sector and probably back to the Bank of Ghana. In doing so you must continue increasing the policy rate and the policy rate has been increased over the period,” Mr. Adongo stated on Morning Starr with Francis Abban Monday.
The lawmaker indicated that the situation will therefore create a difficult environment for the business community.
“Because he must be able to find a business that gives him 35% of return or margin in order to pay the interest and have something to survive on. The government will have to pay a very huge sum of money to borrow, so the government is now borrowing at 33% for 90 days.
“The end result is that the government doesn’t even have the revenue to service this 33% and it’s back in circles. So the Bank of Ghana having thrown money into the economy to chase the dollar and trying to bring those monies back into the economy is now creating difficulty for the businessman.
“If the Bank of Ghana says the rate is 12% or one percent, do you have the dollar to give at that rate, no, you don’t have. Abochi has the dollar and he says it’s Ghc20. So the Bank of Ghana only has a paper to announce the rate but the Abochi has the dollars and this is where we are,” Mr. Adongo stated.