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Depreciation of the Cedi: watch the repatriation of money – the government says

Ghana cedi banknotes | File photo

The government has been asked to critically assess and monitor the repatriation of income by foreign companies operating in Ghana and to investigate income flows from religious organisations.

It must also put in place measures to regulate money sent out of the country by wealthy individuals through the payment of school fees, hospital bills and other essential services.

Dr. Joseph Obeng, trade unionist, Dr. Abdallah Ali-Nakyea, tax analyst and Mr. Bernard Anaba, policy analyst at the Center for Integrated Social Development (ISODEC), said the above measures would help strengthen the country’s reserves. and contain the depreciation of the local currency (the Cedi).

They said so in separate interviews with the Ghana News Agency following the recent fall of the Cedi.

The Bank of Ghana (BoG) Monetary Policy Report 2022 indicated that the Cedi depreciated by 4.1% and 3.1% against the US dollar and British pound, respectively, on a annual basis to date. [in 2021].

The Central Bank noted that the Cedi was less volatile during the first 13 trading days in 2022 compared to the same period of 2017-2019.

Checks carried out by GNA at certain exchange offices and commercial banks showed that a dollar was bought between GH₵6.85 and ₵7, and sold between GH₵7 and GH₵7.05.

Against this backdrop, Dr. Obeng, President of the Ghana Traders Association (GUTA), said it has become necessary for the government to assess how church funds are flowing.

He said: “You cannot remove the role of the churches in controlling the money at this time. So you have to see how the incomes of the churches are changing and if they are not going into productivity like agriculture, we have to be able to see where that money is going.

He added that: “There shouldn’t be any control over their funds, but we should be able to find out where the flow of that money is going. Not just churches, but we need to open our minds to whatever drives demand [for the dollar] including payment of tuition fees and hospitalization costs abroad.

Dr Ali-Nakyea said one of the factors behind the fall of the Cedi was the strong demand for the dollar, which had seen the exchange rate [the price for the foreign currency] depreciate.

He said: “When it starts, apart from those transferring, other businesses panic then you will find a panic buying of the foreign currency because people would now prefer to hold their value in foreign currency rather than in Cedi”.

He said: “…once the Central Bank is also unable to meet the demand for currency, then they start looking for it elsewhere, and that’s where the money changers and the black market drives up the rate because you can get it, but at a higher price, and all of that drives up the exchange rate and depreciates the Cedi.

Regarding the tracking of inflows from religious organizations, Dr Ali-Nakyea said, “There is no reason to ask churches to pay taxes on their main sources of income, which are tithes and offerings.”

He added, however, that: “The church can also raise funds to expand its building or to do its outreach outreach programs. Through monitoring and evaluation, we will be able to know if, indeed, all that has been harvested has been spent for the purpose for which the church was established. If not, we may consider any unrecorded money to be business income and tax it.

He said it was important for government and other regulators to effectively monitor and enforce the laws that govern the sector, making sure the sources of money were known and the required taxes were paid.

For his part, Mr Anaba said: “As we campaign for churches and other religious organizations to be taxed and for the government to funnel the money into development, this is the same way we should be concerned. because even when the government gets the money, it goes to the right places.”