Professor William Baah Boateng, an economics lecturer at the University of Ghana, said in an interview that while the cedi’s recent strength may reflect improved fiscal discipline, it does not signal a fundamental economic turnaround.
“When you look at the structure of the economy, we still have the same structure as it used to be last year,” he said. “But something is happening in terms of the fiscal. Government has tried as much as possible to manage expenditure, and that is one thing you cannot lose sight of.”
Prof. Baah Boateng drew a clear distinction between cutting expenditure and exercising fiscal prudence. “Government is not cutting expenditure. We have to differentiate between cutting expenditure and managing expenditure,” he noted. “Government is making sure that the expenditure it incurs will be supported by economic activity. That helps tame the fiscal side.”
This approach, he said, is beginning to ease pressure on the monetary authorities. “Now, if fiscal is putting its acts together, then it means that the mess will not be there for the central bank to come in. The central bank will have peace of mind to focus on monetary and exchange rate policy.”
The economist also pushed back against bullish sentiment from some segments of the private sector, particularly traders, who have cheered the currency’s rise. He was especially critical of members of the Ghana Union of Traders Association (GUTA) for calling for further gains in the exchange rate without committing to passing the benefits on to consumers.
“I disagree with my friend from GUTA who said he would be happy to see the dollar go from ¢13.49 to ¢5,” Baah Boateng said. “I’ll be happy if he says that when the dollar goes down, he will reduce his prices accordingly. But if that’s not going to reflect in the domestic market, then we have to be very careful.”
He took aim at the long-standing practice of price asymmetry in the retail sector. “If the cedi is appreciating, then they should reduce the price in anticipation of further appreciation,” he said. “Importers always increase prices in anticipation of depreciation. Let’s see the same behaviour in reverse.”
Prof. Baah Boateng also praised the Bank of Ghana for maintaining a steady hand in managing policy, noting its shift toward a more data-driven, less reactive approach. “What I see the central bank doing is watching and not just reacting,” he said. “There’s no economy that has only demand and supply doing everything. There is always some regulation. So the Bank of Ghana’s posture is prudent.”
He added that no economic model functions purely under ideal conditions, such as perfect competition or monopoly. “Don’t let us just talk about perfect competition or extreme monopoly. No economy is purely one or the other. There is always intervention.”
While Ghana’s macroeconomic indicators may be stabilizing after a period of volatility, Prof. Baah Boateng cautioned that lasting recovery hinges on long-term reforms, not short-term currency movements.
“The fundamentals require sustained structural reforms and responsible fiscal management, not just short-term currency appreciation,” he said.
