The Ghana Cedi’s recent impressive performance against major trading currencies is fundamentally different from other gains made in the past, since the state has what it takes to sustain the development, this is the observation of Dr. Paul Appiah-Konadu, economist at Pentecost University.
Dr. Appiah-Konadu says the recent appreciation and stability of the Ghanaian cedi is not merely a stroke of luck that is just fleeting away. He maintains it is a direct result of deliberate fiscal discipline, strategic reforms, and growing market confidence.
In his detailed analysis copied to The High Street Journal, Dr. Appiah-Konadu argued that a confluence of policy decisions, which range from reduced government borrowing to tighter monetary control, has laid a solid foundation for macroeconomic stability.
“This government is doing certain things right and must be encouraged to keep up with prudent fiscal management (reduced borrowing and the pursuit of value for money in public expenditures),” he remarked.
In his view, a remarkable milestone has been achieved in this fiscal year. For the first time in the Fourth Republic, the government’s projected expenditure for 2025 is set to be lower than the previous year’s, signalling a strong indicator of fiscal restraint.
The fiscal deficit on a commitment basis is also projected to drop sharply from 7.9% in 2024 to 3.1% in 2025, even as the government resumes debt servicing after a two-year moratorium.
On the flipside, he recognizes that the monetary policy front has played a crucial role. The economist acknowledges that the Bank of Ghana’s significant accumulation of foreign reserves has been pivotal. The country’s foreign reserves have swelled to over $9 billion, and gold reserves now stand at an impressive 31.5 tonnes, partly crediting the previous government for what he describes as the innovative Gold Purchase Programme introduced in 2023.
With these and other factors, Dr. Appiah-Konadu remarks that Ghana’s current currency performance is fundamentally different from previous episodes of temporary relief. To him, there are enough favourable conditions to maintain this momentum of the cedi in the long-term
“Our fereign exchange reserves has hit 9 billion dollars, gold reserves in excess of 31.5tonnes ( credit to the outgone NPP govt for that innovative gold purchasing program adopted in 2023 ) have also enhanced the capacity of BoG to intervene in the market whenever the demand for the dollar increases (note that the BoG has offloaded in excess of 400 million dollars in the last few months to shore up the cedi),” he explained.
He added that, “The current appreciation and stability of the cedi is unlike what was experienced previously, and we have more leverage to sustain it now than ever before.”
The turnaround has also been felt in investor behavior. Treasury bill auctions have been oversubscribed for ten consecutive weeks, with interest rates dropping from an average of 28% in December 2024 to around 15% today. This development, he says reflects renewed confidence in cedi-denominated assets.
However, he was quick to add that the sustainability of the cedi’s strength will require more than macroeconomic tweaking. He is calling for a national push toward import substitution industrialization and the diversification of Ghana’s export base.
With gold, cocoa, and crude oil accounting for 84.1% of export revenues in 2024, Ghana remains vulnerable to external shocks unless it adds value to its raw materials and reduces dependence on imports.
The economist maintains the recent appreciation of the cedi is not a fluke but is real, borne out of proper fiscal and monetary policies, making it different from other gains made in the past. He calls for sustainable measures to enable the gains to stick and stay.
