Vice-President Dr. Mahamudu Bawumia has explained why the Western African CFA Franc has not witnessed steep depreciation as the Ghanaian cedi did in the midst of the global crisis.
The cedi has been on a free fall since 2022, worsening the economic difficulties in Ghana.
Government has consistently blamed the situation on the crisis caused by the COVID-19 pandemic and the Russia/Ukraine war.
But critics have disputed this assertion, questioning why other currencies in the sub-region including the Western African CFA have not experienced such steep depreciation as the cedi since they have all been exposed to the adverse effects of the crisis.
Explaining at an engagement with the media why the Western African CFA Franc is relatively stable as compared to the cedi, Dr. Bawumia said the Francophone currency is anchored to the euro. As a result, it is able to withstand the shocks of the crisis and mitigate the adverse effects on its performance against especially major trading currencies.
“Someone asked me ‘why is it that the French West African countries have not seen depreciation in their currencies; Cotê D’Ivoire, Senegal and all of these’. I said they are anchored, their currency is anchored to the Euro through the French Franc so they are anchored,” he stated.
On the other hand, he said the cedi has no such anchor and thus, its vulnerability to crisis.
“Unfortunately for Ghana, we don’t have an anchor. There’s no anchor for the cedi”.
Dr. Bawumia is confident that the Gold for Oil policy, if institutionalized, will strengthen the cedi against crisis.
“What I want to institutionalized is something that we have learnt from this crisis. You’ll not find in any textbook. Maybe, some people will now write in a textbook”.
