An economics lecturer on the College of Ghana, Professor William Baah Boateng, has issued a direct problem to Ghanaian importers and merchants benefiting from the appreciating cedi.
He says they need to mirror the good points of the native forex within the costs of products or threat exposing a double commonplace.
Talking on Pleasure Information’ PM Categorical Enterprise Version on Thursday, Could 8, Prof. Baah Boateng questioned the logic of enterprise house owners who hike costs in anticipation of cedi depreciation however fail to decrease them when the cedi good points power.
“I will likely be very blissful if he says when it goes down, then he may also cut back his costs to mirror the identical stage,” he mentioned in response to feedback from a consultant of the Ghana Union of Merchants Affiliation (GUTA), who had earlier expressed delight over the cedi’s appreciation.
“But when it’s not going to mirror on the home market on the pace the cedi is appreciating, then now we have to be very cautious,” he warned.
The economist described a typical market behaviour the place importers assume the worst when the cedi weakens and worth their items accordingly.
“When the cedi is appreciating, importers will by all means enhance the value in anticipation of additional depreciation,” he mentioned.
“And I anticipate that whether it is appreciating, then they need to cut back the value in anticipation of additional appreciation.”
Prof. Baah Boateng’s remarks come amid rising public frustration that the strengthening cedi isn’t translating into cheaper items and companies.
He argued that true market self-discipline ought to apply each methods.
“For those who’re going to regulate costs upwards when the forex is falling, then do the identical when it’s rising. Don’t use one commonplace for losses and one other for good points.”
He additionally defended the Financial institution of Ghana’s present cautious strategy, praising its posture within the present setting.
“What I see the central financial institution doing is watching and never simply doing something,” he famous. “They’re seeing how issues unfold, and that’s smart.”
The economist used the chance to emphasize that financial realities don’t play out in a vacuum.
“There’s no financial system the place demand and provide alone decide all the things,” he mentioned. “There may be all the time some stage of regulation in each market.”
Whereas acknowledging some enhancements within the authorities’s fiscal self-discipline, he clarified that the basics of the financial system stay principally the identical.
“Once you take a look at the construction of the financial system, we nonetheless have the identical construction because it was once final 12 months,” he mentioned.
Nonetheless, he acknowledged efforts to regulate spending. “Authorities has tried as a lot as doable to handle expenditure,” he noticed.
“This isn’t chopping expenditure, however ensuring the spending is tied to financial exercise.”
He argued that such fiscal administration helps stabilise the financial system.
“If the fiscal is placing its acts collectively, the central financial institution gained’t want to return in to clear the mess. It provides them peace of thoughts to deal with financial coverage and alternate fee stability.”
Prof. Baah Boateng’s message was clear: the cedi’s appreciation should not be handled as a PR enhance whereas merchants proceed to function on fear-driven pricing fashions. If the market is truthful, worth reductions should comply with forex good points.
DISCLAIMER: The Views, Feedback, Opinions, Contributions and Statements made by Readers and Contributors on this platform don’t essentially symbolize the views or coverage of Multimedia Group Restricted.
DISCLAIMER: The Views, Feedback, Opinions, Contributions and Statements made by Readers and Contributors on this platform don’t essentially symbolize the views or coverage of Multimedia Group Restricted.
Source link
