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Revelation of true state of economy cause of cedi depreciation: Senior Minister

In a broadcast interview, the Senior Minister emphasised that the economy performed poorly in December 2016 and that the ripple effect is being felt now.

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“The cedi depreciated because the true economic situation of Ghana came out, the economy that was a cover up, " he told Joy FM in a broadcast interview.

"The cedi depreciated because of the economy had performed poorly by at end of December," he added.

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The former finance and sports minister under the Kufuor administration also noted that President Nana Akufo-Addo's first budget has concrete measures to stabilise the cedi.

He said the economy will begin to improve and take shape in the next three weeks when parliament would have approved the budget.

"But now the budget has put in place measures that stem that whole economy, to reduce the deficit and improve our foreign reserves," he said. "It takes about three weeks to a month for people to respond to such economic indicators."

GN Research has predicted further depreciation of the cedi if the government fails to prevent the side effects of the numerous tax cuts it is implementing.

They argue that even though the reduction in taxes is an incentive for businesses to expand, it will also lead to an increased demand for dollars.

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“Ghana’s currency, the Cedi is likely to record high levels of depreciation during the year if the government does not clearly come out with a policy to manage the situation.”

“During the first weeks in March 2017, the cedi has recorded a significant year to date depreciation of 7.36% against the dollar and 7.31% against the Euro. This makes the Ghana Cedi the worst performing currency on the African continent for the period under review- 2017,” it added.

The study also explained that one main cause of the instability of the cedi is because of the increase in demand without a corresponding increase in the supply of the dollar.

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