It is a consolidated fact that the management of the currency (Cedi), including investigations into the depreciation of the currency, is the constitutional mandate of the Central Bank of Ghana.
In article 183 (2)(a) of the Constitution, the BoG is mandated to promote and maintain stability of the currency in the interest of economic management and progress of Ghana. Also, it is only the BoG that can disallow any forex exchange transactions.
In the spirit of the above provisions, the Committee set up to do same work is alien to the constitution of Ghana and portrays the BoG as lacking what it takes to manage the currency to foster economic progress of Ghana.
The BoG is capable of effectively delivering on this mandate if government aligns its policy decisions with the advise of the BoG, especially, relating to fiscal policy including huge borrowings and the interest cost burden. There must be conscious coordination between the path of government and the BoG.
The new development may also send erratic signals to critical institutions, investors and financial journalists that currency management is hitting dry-hole in Ghana.
This development requires critical adherence to article 184 of the Constitution in which the BoG is required to present report on currency management to the Finance Committee of Parliament for Parliament to monitor Forex developments and play beneficial oversight role in currency management in Ghana. The Constitution requires the BoG to present semi-annual report to Parliament, on one hand, and currency management report to the Auditor General which will then be presented to Parliament for debate. The layman understanding of debate, in this context, is that it is an open discussion about the currency based on report from BoG. The question now arising is: how many times, in the past two years, has Parliament received this important report and debated on currency developments to ensure the progress of Ghana?
The government’s failure to follow the clear procedures provided in articles 183 and 184 regarding currency management in Ghana makes any FX Committee which is not set up by parliament problematic and also signals currency management failure by the BoG.