Government Intensifies Efforts to Stabilize Ghana Cedi

The Ghanaian government has announced a series of intensified measures to stabilize the Ghana cedi, which has depreciated by 14% against the US dollar this year. These measures include accelerating the Gold for Oil and Gold for Reserves programmes and fast-tracking fiscal consolidation processes.

Addressing the media in Accra last Friday during the Monthly Economic Update Series, the Minister of Finance, Dr. Mohammed Amin Adam, highlighted that the local currency had been largely stable despite recent pressures. He noted that the depreciation rate of the cedi against the US dollar had reduced from 54.2% at the end of November 2022 to 27.8% by the end of December 2023. The cumulative depreciation as of May 20, 2024, stands at 14.2%, compared to 20.7% during the same period in 2023.

Dr. Adam attributed the recent pressures on the cedi to the strengthening of the US dollar against major trading currencies, seasonal forex demand, elevated corporate demand, payments to contractors and independent power producers, high cedi liquidity, and speculation.

To address these challenges, the government is expediting fiscal consolidation through spending rationalization and revenue enhancement. Additionally, the government expects to receive $2.3 billion from development partners, including a $360 million tranche from the International Monetary Fund (IMF) and a $150 million loan from the World Bank, among other disbursements.

Businesses in Ghana have expressed concerns over the cedi’s depreciation, which has significantly impacted their operations and increased costs for consumers. The Ghana Union Traders Association and the Chamber of Automobile Dealership Ghana have called for urgent government intervention.

Proceeds from the 2024/25 Cocoa syndicated loan and disbursements from various development partners are expected to bolster the cedi by boosting dollar supply. Dr. Adam assured the public of sufficient foreign exchange reserves and discouraged panic buying of foreign currency.

The Finance Minister emphasized the government’s commitment to macroeconomic stability and economic recovery, while acknowledging the ongoing fiscal challenges. He called for the support of all Ghanaians to ensure the successful implementation of government initiatives and to achieve collective economic goals.

Dr. Adam projected a brighter medium-term outlook, with expectations of increased economic growth, reduced inflation, and full debt sustainability by 2028. He highlighted the recent improvement in the public debt trajectory, with the debt to GDP ratio decreasing to 71.4% at the end of 2023 from 73.5% in 2022.

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