PRICEWATERHOUSE-COOPERS (PwC), a leading multinational professional services network says inflows from cocoa syndicated and Eurobond loans, estimated at US$3billion, would do little to ease the pressure on the cedi.
Director, Risk Assurance, of PwC Ghana, David Brooke explained that the currency’s historical performance against the United States Dollar did not portend a healthy outlook.
“Given the history of exchange rate movement in this country, I am not sure how much the cedi can recover from its present decline even when the proceeds from the cocoa syndicated loan and the Eurobond are received this year,” Brooke said.
Ghana Chamber of Commerce and Industry CEO, Seth Adjei Baah, added that the panacea to the cedi’s slide lies mainly in correcting the widening balance of trade deficit.
Since 2012 Ghana has had consecutive years of double-digit current-account deficits, reflecting the appetite for imports.
To turn the tide, Baah said a conscious approach must be taken to help growth of the manufacturing sector.
“Addressing the issue of manufacturing means that we will be able to produce most of the things we use here.
“Most of the essential goods we use, 80-85 percent, are imported. If we are able to cure the thirst for foreign goods, the cedi will be able to stabilise,” Baah said.
The cedi has depreciated by 27 percent this year as shortage of the dollar continues to dictate the price at which the greenback is traded.
After several attempts to stem the cedi’s decline yielded little results, the Bank of Ghana is now confident arrival of the syndicated loan and issuance of the Eurobond later this year will help restore some faith in the cedi.
This year’s cocoa loan, which is estimated to be US$1,8 billion and the highest Cocobod has raised in two crop seasons, will be used to purchase beans during the 2014/2015 cocoa harvest.
“We anticipate that proceeds from the cocoa syndicated loan and the Eurobond issuance, estimated at almost US$3billion, will provide significant support for the [currency] market in the second half of the year,” BoG Governor Dr. Kofi Wampah said.
Credit: allAfrica.com