The Ghana cedi in 2025 has staged a remarkable comeback, which is unprecedented in its history, at least, in the country’s fourth republic. The cedi has appreciated by a stunning 42.6% against the US dollar in just the first half of 2025.
On the streets, importers breathe easier, fuel prices are more stable, and inflation is finally losing its bite. From trading at GH¢17 to the dollar earlier this year, the cedi now hovers near GH¢10.4.
This robust appreciation, BoG says, was fueled by strong exports, rising reserves, and investor confidence under the IMF programme.
While businesses are smiling, and customers are experiencing an increase in their purchasing power due to the accompanied disinflation, which has led to cooling prices, beneath the celebration lies a fiscal “sabotage.”
The cedi’s strength is also quietly gutting government revenue.
The Paradox of a Strong Currency
In a twist of economic irony, the very thing stabilizing Ghana’s economy is now unsettling its public finances. According to the Ministry of Finance, total revenue and grants fell 3.2% below target in the first half of 2025.
The main culprits? A GH¢1.6 billion shortfall in customs revenue and a GH¢2.7 billion drop in petroleum receipts, both tightly linked to the cedi’s surge.
Addressing parliament during the 2025 Mid-Year Budget Review, here is how Minister for Finance, Dr. Cassiel Ato Forson, captured this.
“Import duties fell short of target by GH¢1.6 billion….. Non-Oil Tax Revenue (net) exceeded target by about GH¢786.9 million. However, Petroleum receipts fell short of target by GH¢2.7 billion due largely to delays in receipts from corporate income tax from oil and the appreciation of the Ghana Cedi,” the Minister announced.
The question on the lips is many is Why? This is because in Ghana, many key revenue streams, like import duties and fuel taxes, are pegged to the value of goods priced in U.S. dollars.
When the cedi appreciates, those dollar-priced goods translate into fewer cedis. And fewer cedis collected at the port means lower revenue, even if trade volumes remain steady.
Petroleum Revenues Dip
Petroleum-related taxes are especially vulnerable. Ghana imports nearly all its fuel, paying in dollars. When the cedi strengthens, the same barrel of oil costs fewer cedis. Consumers may rejoice at lower pump prices, but the government collects less per litre in taxes, effectively taxing a smaller base in local currency.
Customs Duties Also Feel the Pinch
It’s the same story with import duties. Although these import duties are priced in dollars, importers pay in their cedi equivalent. For instance, a container of electronics or clothing priced at $10,000 will now be valued at fewer cedis upon arrival. That means importers pay less in duties, even if the volume of goods hasn’t changed.
The GH¢1.6 billion drop in customs revenue, as announced by Dr. Ato Forson, is not about fewer goods entering Ghana; it’s about the stronger cedi shrinking their tax value.
Corporate Taxes and VAT: Another Silent Casualty
Many businesses report earnings in cedis, even if they earn in foreign currency. So when they repatriate revenue earned abroad, those dollars convert to fewer cedis, leading to smaller taxable income on paper. The result? A quiet but significant drop in corporate tax and VAT receipts, despite healthy business performance in dollar terms.
Good News, but Bad Math
This situation presents a policy dilemma for the government. A strengthened currency in economic management is good news. Why? Because it eases Ghana’s debt service, reins in inflation, and boosts credibility. But unless fiscal planning accounts for this currency shift, it can leave tax agencies chasing ghosts.
In simple terms, the appreciation indirectly shrinks the domestic-currency base for taxation even when volumes or USD pricing remain steady.
A New Reality for Revenue Planning
The cedi’s appreciation is not a crisis; it’s a signal. It shows that economic fundamentals are improving. But it also reminds policymakers that stronger currencies change more than just import bills; they can shift the entire revenue projections and throw them off track.
It is therefore imperative for the government to adapt its tax systems and administration to make room for currency appreciation. If the government doesn’t adapt its tax systems to this new currency reality, it may find itself celebrating a strong cedi while lamenting weak revenue.
The Expert’s View
Reacting to the development to The High Street Journal, U.S.-based Finance Professor at Purdue University Northwest, Prof. Pat Obi, says the current situation underscores a long-standing fragility in Ghana’s public finance architecture. He says it’s a manifestation of the overreliance on exchange-rate-sensitive revenue sources.
To him, it’s about the fact that too much of Ghana’s revenue rises and falls with the exchange rate. That he says, it’s a risky way to run a modern economy.
But Prof. Obi believes this is a symptom of a deeper imbalance. In his view, fiscal strength should come from a growing and diversified domestic economy, where government revenue is tied more to household consumption, small business expansion, and private investment flows than to imported goods and global oil prices.
Rather than focusing narrowly on how to protect revenues from exchange rate volatility, Prof. Obi advocates reframing the challenge entirely:
To avert future shocks, he calls for deepening domestic production, expanding the tax net to capture more SMEs, and stimulating private-sector-led growth. He also supports targeted fiscal reforms that reduce dependence on external trade taxes and shift focus to consumption-based and income-related tax structures.
“I believe the focus should be on achieving stable economic growth, regardless of exchange rate movements. If Ghana can secure broad-based, consistent growth, then fiscal planning becomes more predictable, even amid fluctuations in the currency,” he indicated.
