Ghana’s Finance Minister defends steps taken to halt currency slide
By Kwasi Kpodo
Ghana's Finance Minister Seth Terkper defended steps taken by the government to halt a steep fall in the country's cedi currency and told the Reuters Africa Summit the measures would soon start to take effect.
The cedi has fallen 14.6 percent this year following a drop of around 20 percent in 2013 and many analysts argue the decline is not simply a reflection of strong dollar demand for imports but also a leading indicator of weakness in the macro economy.
That weakness, seen in a 10.8 percent budget deficit last year, has tarnished Ghana's reputation as one of Africa's leading economies based on its record of solid growth, stable democracy and exports of gold, cocoa and oil.
"We believe the measures are credible and, considering the efforts we're making from the fiscal side, we should begin to yield the desired results," Terkper told Reuters.
Importers and traders complain the fall damages business. A prominent pastor made headlines in February when he prayed in his church for God to "resurrect" the currency.
The following month the central bank issued a series of regulations designed to restore currency stability including a ban on the conduct of transactions in Ghana in dollars and a 200-basis point hike in interest rates.
Some critics argue the measures will have only a short term impact and urge the government to take more radical action to reduce fiscal instability, which they say is the root cause of the slide.
Terkper said Ghana is also exploring alternative means of funding its debt. The government has delayed plans to issue a 2014 Eurobond given the high yields it would likely attract amid investor nervousness about the country.
It has held talks with Brazil about a $1 billion credit facility for infrastructure, he said. The South American country has increased its support for Ghana in recent years, providing funds for military aircraft and related equipment including a hangar.
Terkper said talks with Brazil aimed to "promote good governance and private sector business" but he declined to give further details other than to say talks were ongoing.
The finance minister travelled to China in late March for talks over the delayed disbursement of the remainder of a $3 billion loan from the Chinese Exim Bank approved by parliament in 2011.
Around $600 million of the loan has been disbursed so far and the government has used the money to finance a $750 million gas pipeline to connect the country's main offshore Jubilee oil field to the coast. The pipeline is yet to be completed.
Opposition politicians have said in parliament the government may no longer pursue the loan due to demands by China that Ghana repays the debt with more oil than originally agreed.
"The government will make its position known after cabinet discussions," Terkper said. – Reuters