Economist Professor John Gatsi has said that Ghana’s economy has not reached the stage when it can adopt a ‘weak currency’ policy, as suggested by legislator-cum-economist Dr. Mark Assibey-Yeboah last week.
“It is not a good thing to have a strong currency”, explaining: “Do you know why tourists come here? When your currency is weak, it’s a fair place. You, when you are going on vacation, you’ll not go to a country that has a very strong currency because you need to exchange a lot; if you are going to the UK, you need to exchange a lot of cedis to get the pounds to go there.”
But the argument by many analysts and market watchers is that a weaker currency affects inflation, impact negatively on the cost of doing business as well as increasing cost of living.
Professor Gatsi says a country can only adopt a weak currency policy when its manufacturing sector is very strong whilst exports is robust.
“The issue is that weak currency in an economic environment where production is effective and export is robust, it helps to ensure economic activities go on, generate more from exports; that is what weak currency does, that is an advantage of a weak currency. But in an environment like Ghana where productivity is low, exports to GDP is low, value addition is low, a weaker currency will not help your economy.
The cedi ended the first two months of 2020 much more stronger (appreciation) than previous years.
The Chairman of the Finance Committee in Parliament, Dr. Assibey-Yeboah, had said it is not always good to have a strong currency. According to him, the weakness of the cedi attracts more tourists to Ghana and thus stimulates tourism.
Source: Classfmonline
