Minority frowns on new Ghana Cedi Notes

The Minority  in parliament has referred to the reason for the introduction of higher cedi denominations by the Bank of Ghana to as not only unsatisfactory and unreasonable but also absurd.

According to the minority, the unacceptable explanations by the bank of Ghana and its president are just tantamount to “voodoo economics”.

This was made known via a press conference it organized in Parliament House last week. The 23-point press statement concluded that, the minority is giving notice that the future NDC governments to be inaugurated in 2021 will conduct a forensic audit into the entire exercise, as well as others which would focus on the individual roles played by members of the Bank of Ghana Board and friends and family of President Nana Akufo-Addo.

Minority statement on the introduction of new Higher–Denomination banknotes and coin.

1. The Bank of Ghana is reported  on Friday November 29, 2019 to have issued to higher denomination of the Ghana Cedi notes GH¢100 and GH¢200 and a GH¢2 coin which  replaces the withdrawn 2 cedi notes. Ghanaians will recall that in May this year the central bank introduced upgraded cedi notes. Ghanaians are still waiting for the Governor of the central bank to render account of the cost of printing the upgraded currency.
2. The Governor of the Bank of Ghana has offered unsatisfactory explanation for printing the higher-denomination cedi bank notes. Among the reasons given for the exercise include that, the new higher denomination notes “will complement the existing series to ensure customer convenience and bring about efficiency in the printing of currency to generate savings for the country”. This amounts to an affront to have paperless economy.
3. The central bank governor also argued that “ these new higher value denominations will restore the dollar value of the higher denomination to about USS40, not quite close  to levels in 2007, but high enough to significantly reduce the deadweight burden and high transaction cost in making high –value purchases in a cash-based economy like Ghana”. The minority finds this very disappointing and absurd. Do we have a dollar-peg as our currency regime in Ghana?
4. We were made to believe that simply increasing the currency bound would suddenly increase our economic fortunes compared to the United States. The determinants of long-term growth are known and include variable such as factor productivity growth and investment, amongst others. Moreover, Ghana does not have a parity regime with the US-dollar and therefore no reason why we should seek to have the cedi indexed to the US-dollar, and it is surprising the Governor is actually such an argument. What we have in place is manged floating regime whereby the Bank of Ghana intervenes in the foreign exchange markets to smooth-out excessive volatility.

The NPP government is obsessed with the nominal movements of the cedi, because what matters are the real movements, which takes account of inflation. For example, if really inflation ii sat 5 year low of 7% currently, then the cedi could be well aligned in real terms irrespective of the cedis depreciation this year. No need to seek to attain a particular parity with the US dollar. It is an exercise in futility.

Source: S O Ankamah