A senior Economist at the Institute of Economic Affairs (IEA), Dr. J. K Kwakye has attributed Ghana\u2019s challenge of controlling inflation to the redenomination of the cedi in 2007.<\/p>\n
The erstwhile Kufuor administration carried out a cedi redenomination exercise in 2007.<\/p>\n
Government, at the time said the purpose of the exercise was to address past episodes of high inflation rates and other economic challenges.<\/p>\n
But delivering the IEA\u2019s 2014 mid-year economic review of the country, Dr. Kwakye insisted the decision to redenominate Ghana\u2019s currency was rather politically motivated.<\/p>\n
He also attributed the decision to government\u2019s intention to \u201ccreate the impression that Ghana\u2019s currency is of a very high value\u201d<\/p>\n
He was however quick to add that the government\u2019s intent to make the cedi stronger at that time was an \u201cillusion.\u201d<\/p>\n
\u201c That is an illusion. I thought that the best thing would have been to knock off just three zeros from the currency,” he said.<\/p>\n
Dr. Kwakye said a country like the US has been able to save its currency from depreciating due to special mechanisms it has adopted over the years.<\/p>\n
\u201cIf you go to the US, one cent which they introduced two hundred years ago is still in circulation\u2026. Why doesn\u2019t it go away? There are all kinds of mechanisms,\u201d he explained.<\/p>\n
The Economist is not the first to attribute Ghana\u2019s economic challenges to the 2007 cedi redenomination.<\/p>\n
Former President John Jerry John Rawlings, while delivering his address during the June 4 uprising at the Revolution Square last month attributed Ghana\u2019s economic crises to the re-denomination exercise.<\/p>\n
Falling short of calling for a re-visit to the state of the currency prior to 2007, Dr. Kwakye said the situation will make the cedi continue to depreciate against the dollar.<\/p>\n
The IEA\u2019s senior Economist also called for the cutting down of Ministries to help minimize government expenditure saying,\u00a0\u201cwe had the Ministry of Transport and Ministry of Aviation. A country that does not even have one airplane has a Ministry of Aviation\u2026”<\/p>\n
Below is the audio version of Dr. Kwakye’s presentation<\/strong><\/p>\n