The International Monetary Fund (IMF) has stated that the lack of effective communication by the government on foreign exchange policies, has partly contributed to the cedi’s depreciation.
The Fund believes that the lack of clarity also made the public resort to speculations which impacted the local currency’s performance.
A report issued by the IMF’s mission that visited Ghana in September said, “Recent exchange rate pressures reinforce the call for fiscal discipline. Going forward, improved communication and coordination would help foster deeper and more liquid FX market.”
For the last three months [July to September, 2018] the cedi has performed poorly against major trading currencies, particularly the dollar.
The issue has also affected other sectors of the economy such as influencing the rise in fuel prices for the second pricing window in September.
The cedi’s losing streak reached about 4 cedis 95 pesewas to a dollar on the interbank foreign exchange market while hitting 5 cedis to a dollar across forex bureaus.
The IMF also highlighted the impact of the volatile environment for emerging and frontiers markets, which it alluded to its impact on the local currency resulting in cedi depreciation.
Meanwhile, the IMF has advised the government to commit efforts to achieving revenue targets for this year.
The Fund views the shortfall in revenue despite rising expenditure as a threat to the government’s plans for the year.