Cedi depreciation: Using natural resources to control it …will have minimal impact – Prof Lord Mensah

 An Economist at the University of Ghana, Legon, Professor Lord Mensah, has voiced scepticism regarding the effectiveness of utilizing the country’s natural resources to support the cedi.

According to him, the effect on the Ghana cedi would be negligible.

This statement follows the Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye, urging the government to explore avenues for obtaining full ownership of Ghana’s natural resources. He suggests leveraging them to support the cedi, thus bolstering its value.

During an interview, Prof. Mensah referred to the government’s “gold for oil” policy, questioning its potential impact on the value of the cedi.

“With or without the Gold for Oil policy, we will still be having the cedi depreciation. We need to ask ourselves what is the component of the exchange rate demand when it comes to oil and then neutralising it with gold. And again, gold price on the global market is stable, that is what we need to appreciate, so, respectively, we were trying to use natural resources to control the dollar but its impact I can tell you is very minimal,” he stated. 

Prof. Mensah also highlighted the underlying issues of political will and discipline as contributing factors to the economic challenges.

“As we have the association of rice importers go and ask them, some of them are in parliament as we speak. So, at the end of the day, it has to do with the lack of political will and also the discipline and commitment to ensure that we solve the problem in the country. Because you may think that you are benefiting from the depreciation of the cedis because you are importing but indirectly one way or the other, you are reducing your capital,” he said.