Top economist urges Bank of Ghana to regulate ‘black market’ to ensure exchange rate is sustained

Professor of Economics at the Institute of Statistical Social and Economic Research (ISSER) Professor Peter Quartey is urging the Bank of Ghana (BoG) to regulate the operations of the black market in the country.

This according to him will ensure that Ghana’s exchange rate regime is sustainable. He has also proposed a number of measures which he describes as key to finding solutions to the exchange rate volatility in the Ghanaian economy.

He made these remarks at the Graphic Business/Stanbic Breakfast Meeting jointly organized by Graphic Communication Group Limited and Stanbic Bank Ghana.

Prof Quartey in his presentation diagnosed the cedis challenges but provided a number of solutions. He broke them down into Short, medium and long term measures.

On the short term, he said enforcement of Bank of Ghana’s recently introduced foreign exchange regulations would help. He also advocated tracking the Demand (DD) for foreign exchange in the forex bureaus as is done in South Africa, Uganda and Kenya where access to foreign currency is not easy to come by.

On the medium to long term, Prof. Quartey said growing the export base in Ghana will ensure the much-needed supply of forex but advised that the country should not just produce but bear in mind the quality of goods.

He argues that some of these together with other measures such as strengthening macroeconomic fundamentals and effective management of short term spikes/slippages would all things being equal ensure the exchange rate is on a sustainable trajectory. He said the exchange rate can be said to be sustainable “when your real exchange rate does not deviate significantly from the equilibrium exchange rate, in other words; if there is no intervention at all, if you allow demand and supply to determine your exchange rate then we can say it is sustainable”

Prof. Quartey added, that also depends on a number of factors “your monetary factors, your real factors and real economic issues and of course how much reserves the central bank is able to hold and several other factors.”

He said “no country has maintained one exchange rate regime for a long period”

Meanwhile, the Governor of the Bank of Ghana, Dr Ernest Addison emphasised that the cedi can be saved through other measures including reducing importation.

Dr Addison urged players in the Oil and gas sector to improve local content as a key measure to sustain the currency.

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