The recent appreciation of the Ghanaian cedi may not be as sustainable as government officials suggest, according to Professor Isaac Boadi, Executive Director of the Institute of Economic Research and Public Policy (IERPP).
He argues that the cedi’s rebound could be the result of artificial market interventions rather than genuine macroeconomic strength.
In an interview, Prof. Boadi welcomed reports of a 40% rise in the cedi’s value but questioned the government’s narrative attributing the gains to prudent economic management.
“People say prudent management, but they should tell us what that really means,” he said. “When you’re not spending huge amounts on projects, these are the kinds of temporary gains you see.”
He suggested that reduced government expenditure and deliberate controls in the forex market might be driving the currency’s upward movement, rather than underlying economic reforms.
He also referenced the IMF’s recent report, which called on the government to review its presence in the foreign exchange market, a sign that some of the gains could be artificial. “Even the IMF questioned this,” he noted.
The concerns come in the wake of the mid-year budget review presented by Finance Minister Dr. Cassiel Ato Forson, which touted macroeconomic stability and external support as major reasons behind the cedi’s performance.
However, Prof. Boadi remains skeptical, warning that claims of fiscal discipline may be overstated if market forces are being actively suppressed.
“Let demand and supply interact,” he cautioned. “If you don’t, what you’re doing is artificial. Real stability comes from allowing the market to function freely.”
