Former deputy Minister of Finance, Dr. Cassiel Ato Forson has projected that the Ghana cedi with return to depreciation trajectory between January to June 2023.
It will achieve stability therefrom after a possible International Monetary Fund (IMF) board approval of a US$3bn facility the government applied for in 2022, which facility he believes will be available in the second quarter of 2023.
Government and the IMF reached a Staff-Level Agreement on the deal late last year.
The local currency depreciation was one of 10 economic projections the Ranking Member on the Finance Committee on Parliament put on in a January 3, 2023 social media post.
“The cedi will inevitably depreciate further, from Jan to June. Before a possible IMF board approval in Q2, 2023.”
Ghana had a torrid 2022 amid an economic crisis that forced government to seek an IMF facility at a time the cedi was rapidly depreciating, inflation was galloping and government was faced with multiple downgrades by rating agencies.
The government has serially blamed the crisis partly on the aftershocks of the COVID pandemic and the ongoing Russia-Ukraine war.
According to Ato Forson, Ghana will likely record a poor non-oil GDP growth citing the impact of government’s debt restructuring programme and other unfriendly fiscal and monetary policies government is set to roll out.
“The haircut on domestic bonds and Eurobond is expected to adversely impact the health of the banking sector, local businesses, and individuals! Also, Bilateral debt restructuring will lead to government’s foreign-financed projects being abandoned.
“Unemployment will worsen due to the freeze on employment, debt restructuring, poor business climate, and massive austerity. Ghana will default in the payment of interest and principal on domestic bonds, Eurobonds, and most of our bilateral loans in 2023.”
He continued: “Also, the government’s policy of automatic adjustment of electricity tariffs will exacerbate the high cost of living in 2023. Inflation is expected to be above 30% for the most part of 2023,” he added.
Government has promised to turn around the economic fortunes of the country after sealing the Staff-Level agreement with the IMF with the hope that funds from the US$3 billion facility will be released early this year.