53.8% cedi depreciation adds GH₵93bn to public debt this year

The depreciation of the cedi, which has lost about 53.8 percent of its value since the beginning of the year has increased public debt by GH₵93 billion.

Finance Minister Ken Ofori-Atta disclosed this during the presentation of the 2023 Budget Statement and Economic Policy on the floor of Parliament

He stated that the depreciation of the cedi seriously affects government’s ability to effectively manage public debt.

“Indeed, our stock of debt has increased by GH₵93 billion this year alone due to the depreciation of the cedi since the beginning of 2022;” he added.

Compared to the average seven percent average annual depreciation of the Cedi between 2017 and 2021, he said the current year’s depreciation, which is driving the high costs of goods and services for everyone, is clearly an aberration – a very expensive one.

Ofori-Atta who noted that it is not only the individuals and households who are adversely affected by the depreciation of the cedi empathized greatly with all Ghanaians for the undue pressures this has placed on their livelihoods.

“We want to commend all of you for your forbearance during these difficult times, “ he said.

He noted that government has to make strenuous efforts to meet import bill, which exceeds $10 billion annually.

He admitted that it has been difficult to meet import requirements including crude oil and petroleum products of about $400m (GH₵4.80 billion) a month

At the same time, he observed that the Ministry of Finance still needs to find about $1 billion annually to keep our lights in our homes and workplaces.

The Finance Minister lamented that the demand for foreign exchange to support unbridled demand for imports undermines and weakens the value of the cedi.

Ofori-Atta  admitted that the increases in fuel prices (Diesel currently GH₵20.5 and Petrol GH₵16.8) has led to increases in prices of most goods and services.

According to him, inflation which government  managed to bring down from 15.4 percent at the end of 2016 to 7.9 percent at the end of 2019 and remained in single digits till the pandemic hit in March 2020 is now 40.4 percent

He noted that even as the State struggles to raise sufficient revenues, high inflation rates continue to eat away the already meagre wages of the average Ghanaian.

“The lesson from this relapse in macro-economic stability makes us even  more determined, as your government, to permanently restructure and transform this economy and build resilience,” he added.