Finance Minister Dr. Mohammed Amin Adam has warned that Ghana may face higher foreign exchange demands if the ongoing drought in Northern Ghana forces the country to import food.
Speaking at a press conference in Accra, Dr. Adam conveyed cautious optimism about making strides in securing the nation’s food supply.
However, he acknowledged that relying on food imports to meet market demands could strain the economy.
Dr. Adam also noted that he has yet to discuss with Agriculture Minister Bryan Acheampong the best strategies for sourcing food to stabilise the market and ensure food relief.
“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 shortage, and the effect on prices, you should expect that inflation will respond.”
He stressed the importance of addressing the ongoing drought to prevent a rise in food imports, which could put additional pressure on foreign exchange reserves.
“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.”
Background
The ongoing dry spell has devastated key agricultural regions across Ghana, especially the 8 regions with preliminary reports indicating that nearly half of the 1.8 million hectares of farmland are already impacted.
The lack of rainfall in parts of the country for several weeks is affecting farming and raising concerns about potential food scarcity and price hikes in agricultural produce.
Although it is the farming season, the northern part of the country, as well as the middle belt, have seen little to no rain for the past two months, devastating crops and leaving farmers distraught.
However, President Akufo-Addo has directed the Finance Ministry to raise GH₵8 billion relief package to assist farmers grappling with the devastating effects of the ongoing dry spell in the eight regions.
The relief package will include cash transfers, food supplies, and other essential items for the affected farmers. A technical task force, comprising officials from the Ministries of Finance and Food and Agriculture, will oversee the distribution to ensure fairness and accountability.
Source: The Ghana Report
