The committee, which will be chaired by the Minister of Finance, Mr Ken Ofori-Atta, has members drawn from all stakeholders of the forex market, including banks, manufacturers, importers, and the Bank of Ghana.

A Deputy Minister of Finance, Mr Charles Adu Boahen, inaugurated the committee last Thursday.

He said the FX Development Committee was mandated to review the current FX regime, identify the current constraints in the systems and offer workable alternative by way of policies and programmes which would potentially reduce FX risks in the economy.

He said the committee would also look at the role of automation and digitisation as a critical enabler for FX reforms.

Mr Adu Boahen said FX volatilities remained a major concern for the government as it impacted real output growth and also increased price inflation.

Policy alternatives

He attributed the seasonal fall in the value of the cedi to external headwinds and cyclical demands for forex by corporate and individuals for trade settlements in recent times, increased demand by the energy sector actors and currency market speculations.

Given the impact of the cedi depreciation on the economy, he said the government established the foreign exchange development committee to offer policy alternatives to address the challenge.

He said the formation of the committee came on the wheels of a direction by the Cabinet which was endorsed by Parliament.

Mr Adu Boahen said ever since the redenomination of the Ghana cedi, the value of the cedi had seen swings mostly in one direction against major trading currencies.

“By September 2019, the currency cumulatively had depreciated by 9.3 per cent against the US dollar compared to 7.8 per cent during the same period in 2018.

Compared against other major trading currencies, the Ghana cedi depreciated by 4.8 per cent against the Euro and 5.6 per cent against the pounds in 2019,” he noted.

Timely interventions

He said the unexpected swings occasioned the Bank of Ghana (BoG) to introduce swift and timely interventions to address the situation.

Despite the interventions, he said the country was not yet out of the woes of FX volatilities.

“We believe there is a lot more we can do as a country to better manage the depreciation of the cedi. It is for this reason why we have assembled what we believe is the cross-section of the country in terms of all the stakeholders within the FX market to help us put our heads together to opine about the challenges and find the way forward,” he said.

The Head of Payment Systems at the BoG, Dr Settor Amediku, who represented the central bank, said the mandate of the BoG was to promote price and financial stability, at the same time ensuring an effective payment system.

Efficient payment system

He said the central bank had over the last three years initiated various policy measures to ensure that the country had an efficient payment system.

“Through our regional initiatives, we have commenced actions such as the Pan African Payment and Settlement System (PASS) by Afrexim Bank to ensure an efficient payment system.

“The overall objective of PASS is that if you look at the African region, there have been a lot of trade among African countries, however settlement is being done in foreign currency.

“With the initiative of Afrexim Bank and central banks of Africa, we have put in place mechanisms that will very soon be launched whereby a Ghanaian buying anything in Nigeria will pay in naira and vice versa,” he explained.

He said the overall objective of this initiative was to ensure that the countries utilise their forex reserves efficiently.

“Looking at the objectives of this committee and the composition of it, BoG is very glad and happy to be associated with this initiative in the sense that one of the key changes with respect to price development is foreign exchange volatilities and any development that is geared towards coming together we are ready and committed to support the process,” he said.