Cedi depreciation to worsen if food import becomes an option – Finance Minister

Finance Minister Dr. Mohammed Amin Adam has warned of a possible increase in foreign exchange demand if Ghana is forced to import food to address shortages caused by the ongoing drought in Northern Ghana.

During a press conference in Accra on Monday, August 26, Dr. Amin Adam expressed cautious optimism about making significant strides in securing the nation’s food supply.

However, he acknowledged that resorting to food imports to meet market needs could have adverse effects on the economy.

He also noted that discussions with Agriculture Minister Bryan Acheampong on the best strategies for sourcing food to stabilise the markets and provide necessary relief have not yet taken place.

“I’m very optimistic that we will make significant progress, but we also know that our inflation basket is dominated by food inflation. When you see food shortages and their effect on prices, you should expect that inflation will respond.

He added, “And will respond in a way that you do not want. Then we are also talking about bringing in food for the markets and also providing food relief. I’m yet to discuss with the minister how we are going to source the food, he may be running away from mentioning imports.

But we already import a lot of our food. And so, one other way that the economy may be affected is from the perspective of foreign exchange.

“People are complaining the cedi is getting weaker against the dollar, the rate is higher against the dollar. And so, if you are going to bring in more food to support what we already have, you need to back it with forex. And therefore, the demand for the dollar will certainly increase.

Relative to what we anticipated if we didn’t have to meet the additional food requirements, some of which may come through inputs.”

He emphasized that the drought would have far-reaching consequences, impacting the economy in various ways.

“In different ways, the economy is going to be affected.”

Northern Ghana is currently grappling with a severe drought that has sparked widespread concerns about food security and the livelihood of thousands of farmers.

The region has been without rain for over two months, with the extended dry spell stunting crop growth and leaving farmers with little hope for a successful harvest.

Source: tigpost