Vice President Mahamudu Bawumia blamed the local currency’s sharp decline on difficulties in passing the 2022 budget and the Russia-Ukraine conflict.
He claims that the situation has resulted in a lack of investor trust in Ghana’s economy, among other things.
“Unfortunately, the financial markets’ assessments of the 2022 budget concluded that our projected 40% increase in revenue, which underpinned the 2022 budget, was not likely to materialize, and thus, our deficit will increase,” he said at a TESCON-organized event on the state of the economy on Thursday, April 7, 2022, organized by Danquah Institute and the NPP.
“The tumultuous budget struggle in Parliament and the budget’s passage did not improve matters,” he continued. This caused uncertainty and signaled to the market that the administration might not be able to get most of its programs passed in such a tight-knit legislature. Investors’ lack of faith in the budget was exacerbated by this.”
Some of the issues highlighted by Vice President Bawumia include the economy being downgraded by international rating agencies.
“Furthermore, delays in enacting key tax reforms appeared to bolster the view that the market will struggle to pass its programs. As a result of worries regarding budgetary and debt sustainability, Fitch and Moody’s downgraded the country’s sovereign credit rating.”
“As a result, they needed to get their hands on some foreign currency right away, which fueled market demand for the US dollar.” The cedi became undesirable as interest rates rose in the United States and other economies. Then there was the Russian-Ukraine war in February. The local foreign exchange market is also under pressure as a result of the rising fuel prices.”
