Ghana’s recent currency gains may be short-lived unless backed by long-term economic reforms, warns Africa Policy Lens (APL), a policy research and analysis organisation. In a new report released on Tuesday, May 27, APL praised the cedi’s strong performance in early 2025 but cautioned that its foundation remains fragile.
“These gains, while encouraging, are built on temporary pillars that require deeper reforms to become sustainable,” APL noted, underscoring the urgency for more strategic policymaking.
The Ghanaian cedi has appreciated significantly over 20% against the US dollar making it one of the world’s best-performing currencies in the first half of 2025. APL attributes this performance to aggressive short-term measures, including nearly $1 billion in forex market interventions by the Bank of Ghana (BoG) and strict fiscal austerity from the Finance Ministry, such as freezing public spending and suspending arrears payments.
However, APL warns that these short-term tools could expose the economy to future shocks if not followed by structural changes.
“Over-reliance on short-term tools such as gold-backed forex support and deferred government obligations could leave the economy vulnerable to external shocks,” the think tank cautioned.
Drawing parallels with past macroeconomic episodes, APL pointed to the 2017–2019 period under the IMF Extended Credit Facility programme, when the cedi experienced relative stability due to strong fiscal discipline, improved fundamentals, and favorable global commodity prices.
“There are lessons from the past particularly the 2017-2019 period that show sustainable stability must be anchored in strong fundamentals, not ad hoc measures,” APL stated.
The group further highlighted that Ghana’s current strategy, if not re-calibrated, risks losing momentum in the second half of the year. Credit rating agencies such as S&P Global Ratings and Fitch Solutions have reportedly flagged concerns over potential depreciation if structural imbalances resurface.
“Global credit watchers are already flagging risks, and Ghana must act swiftly to insulate itself from renewed pressures,” APL emphasized.
To consolidate the gains and avoid backsliding, APL calls for a multi-pronged policy shift. Key recommendations include completing the country’s external debt restructuring, diversifying export revenue sources beyond traditional commodities, and strengthening fiscal management frameworks.
Additionally, the think tank stresses the importance of consistent and transparent communication from government institutions to maintain investor confidence.
“To maintain the current momentum, reforms must be bold, and communication must be clear to avoid spooking markets,” APL stated.
In closing, APL reiterated that while the cedi’s recovery is a positive signal, it is not a guarantee of long-term stability.
“The challenge now is to ensure these gains are not only preserved but built upon. Without long-term reforms, the current stability may not hold.” the report concludes.
