Wednesday, July 23, 2014

Bank of Ghana ordered to respond to cedi depreciation case

The Supreme Court has directed the Bank of Ghana (BoG) to file its statement of case in response to a suit brought against it over the depreciation of the cedi.
Counsel for the BoG, Mr Samuel Codjoe, filed a motion to raise a preliminary objection on the grounds that the court was not the proper forum to hear the matter, which was filed by a lawyer, Dr John Ephraim Baiden, as the plaintiff.
But the court, presided over by Mrs Justice Sophia Adinyira, felt it was necessary for counsel to file the statement of case, in addition to the preliminary objection, for an expeditious trial. 
Other members of the panel on the case are Mr Justice Jones Dotse, Mr Justice Annin Yeboah, Mr Justice N. S. Gbadegbe, Mrs Justice Vida Akoto-Bamfo, Mr Justice A. A. Bennin and Mr Justice J. B. Akamba.
The court has, accordingly, given the BoG two weeks to file its response but the case will be heard in October 2014 due to the upcoming legal vacation, which begins in the first week of August and ends in the last week of September.
The registrar of the court will serve hearing notices on the parties after all the necessary papers have been filed and served on parties.

The suit

A private legal practitioner is asking the court to order the bank to put in measures to provide a stable currency.
While accusing the BoG of overstepping its bounds and, as a result, hurting the cedi, the plaintiff noted in his statement of case that the court should ensure that Ghanaians regained their “monetary sovereignty”.
According to the plaintiff, the BoG was enjoined by the 1992 Constitution and the Bank of Ghana Act to maintain a stable currency for the benefit of Ghanaians and businesses.
The plaintiff, who brought the action in his capacity as a Ghanaian who has lost wealth through foreign exchange rate increases, is pleading with the court to direct the BoG to provide a stable currency.
Dr Baiden is urging the Supreme Court to issue an order of mandamus on the BoG or its governor and the board of directors to provide a stable currency and a change from a floating exchange regime to a fixed regime or a reasonable adjustable peg regime.
He is further urging the court to order the BoG to abrogate the present dual exchange rate or multiple exchange rate system for a single exchange rate system.
The court is also to decide on Dr Baiden’s call for an order directed at the BoG to provide Ghana with a 1:1 or nearer relationship with the leading global reserve currency, as it occurred in 2007.

Perpetual injunction

Among the reliefs being sought by the applicant, who joined the Attorney-General to the suit, is an order for perpetual injunction directing the BoG to refrain from deferring to a floating exchange rate regime in the conduct of its monetary policy.
He is also seeking a declaration that upon a true and proper interpretation of Article 183 (2) (a) of the 1992 Constitution of Ghana and the Bank of Ghana Act, 2002, Section 4 (b), the BoG has neither promoted nor maintained a stable currency for the Republic of Ghana.
Article 183 (2) (a) of the 1992 Constitution provides that, “The Bank of Ghana shall promote and maintain the stability of the currency of Ghana and direct and regulate the currency system in the interest of the economic progress of Ghana”

Public interest action

Justifying his suit in a statement of case, he said he brought the action in the interest of the public, pursuant to articles 2 and 130 of the 1992 Constitution of Ghana.
“In 2013, the local currency suffered 17 per cent depreciation. The year-on-year depreciation shows a 21.96 per cent depreciation of the cedi against the dollar; 28.88 per cent against the pound sterling; 23.98 per cent against the euro and 25.54 per cent against the Swiss franc,” it said.
While imploring the court to direct the BoG to operate a fixed exchange rate regime, which, he said, was being practised by more than 60 countries, the plaintiff said East Timor, Ecuador, El Salvador, Panama, the British Virgin Islands, the Caribbean Netherlands, Palau, among other nations, had adopted the US dollar as their local currency.

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