Decision to borrow in order to shore up cedi will be bad – John Kwakye

Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has asked government not to make any attempt to borrow from the international market to support the Cedi.

In his view, borrowing will further create economic challenges for the country.

Dr Kwakye was reacting to the decision by the government to inject US$2 billion into the economy to shore up the Cedi.

Reacting to this development in an interview with TV3’s Alfred Ocansey, Dr John Kwakye said, “In fact, when I hear that, I am asking myself, where is it going to come from? The President say they are going to pump 2billion dollars into the economy so my question is what is going to come from?"

“The Finance Minister has said that our access to the international bond market is now restricted exactly because of the policy credibility issue that we have here, so I ask myself, is it going to be another Eurobond? Do they now see that they can access international Eurobond?” he said.

Dr Kwakye further noted that he is against borrowing to shore up the strength of the Cedi because the loans will have to be repaid.

“Even talking about Eurobond, I have always had the problem with borrowing to support your cedi because one day the reversal will take place, you will have to repay the loan,” Dr Kwakye said.

The fall of the Cedi against the dollar has become a major concern for stakeholders.

The Cedi is currently trading beyond 7 cedis to the dollar.

Some analysts have predicted it is most likely to cross 8.

A Senior Lecturer at the University of Ghana Business School, Professor Lord Mensah, indicated that Ghana’s economy is struggling due to both global and international pressures.

Speaking on the Sunrise show on 3FM Monday, March 21, Prof Lord Mensah said, “This economy is suffering from global pressures and internally, we have our own problems.”

He also noted that “Foreign investors are pulling out of our economy and that is alarming.”

Watch the latest edition of BizTech below: