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Exchange rate did not see a spike after election – Ofori Atta

Finance Minister Ken Ofori Atta has said that for the first time in the history of the fourth republic, the exchange rate did not see a spike after an election year.

Delivering the 2021 mid year budget statement in Parliament on Thursday July 29, he explained that cumulatively, from the beginning of the year to date the exchange rate has depreciated  by 0.6 per cent against the US dollar  and appreciating  by 3.6 per cent against the Euro.

“For the first time in the fourth republic the exchange rate did not  see a spike after an election  year.

“Cumulatively,  from the beginning of the year to date the exchange rate has depreciated  by 0.6 per cent against the US dollars  and appreciating  by 3.6% against the Euro,: he stressed

He further told the House that he did not come to ask for more money from the House in the mid-year budget.

He also said he did not come for more taxes rather, he came to update the House and the country on the performance of the economy during the first half of the year.

“I have not come here today to ask for more money, I have not come to ask for more taxes, I have come to update the house on the performance of the economy for the first half of the year,” he said amidst claps from members of Parliament.

Touching how the government has managed the impact of the Covid on the economy,  he stated that the Akufo-Addo administration took bold and decisive measures to deal with the negative impact of the covid on the economy.

Mr Ofori-Atta told the House that the huge negative impact of covid on the global economy was to be expected because no country around the world expected a pandemic of this magnitude.

However, he said governments around the world including that of Ghana acted with prudent measures to deal with the situation.

“The hardship of covid 19, the stress, negative impact on employees and employers was unprecedented but expected because no country in the work had prepared for it.

“We took responsible, innovative and decisive and bold actions to tackle the crisis,” he said.

As part of efforts to deal with the effect of the covid on the local economy, the central bank unexpectedly cut its benchmark interest rate to the lowest in more than nine years to support the recovery of the economy.

The monetary policy committee reduced the rate to 13.5% from 14.5%, Governor Ernest Addison told reporters on Monday in Accra, the capital. All four economists in a Bloomberg survey expected the rate to remain unchanged.

Ghana’s central bank was one of the first in sub-Saharan Africa that stepped in last year by cutting lending rates to shield the economy from the fallout of plunging oil prices and lockdowns to curb the spread of the Covid-19 pandemic. While the 150 basis-point cut announced in March 2020 was the last monetary policy support it provided and output expanded at the slowest pace in 37 years, the West African economy still fared better than most of its peers, where gross domestic product contracted.

Economic activity has picked up strongly, even as new taxes that were implemented this month weighed on consumer and business confidence, Addison said. GDP could expand by 4.6% this year, according to International Monetary Fund projections.

Inflation dropped to a 13-month low of 8.5% in April, moving close to the centre of the central bank’s target range as food-cost growth eased. That’s after the rate was above the target band of 6% to 10% for most of the past year. The MPC expects the rate of price growth to reach the midpoint of the target range by June.

Positive moves in the economy and on the direction of inflation, as well as the fact that the risks associated with last year’s election are over, gave the MPC room to bring down the policy rate to signal progress, Addison said.

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