From the beginning of 2025, the Bank of Ghana has shown a determined effort to stabilize the economy and support growth. The central bank has cut the Monetary Policy Rate (MPR) from 31.6% in January to 21.5% by September, lowered the 91-day Treasury Bill rate to 10.3%, and reduced the average lending rate to 24.15%. The Ghana Reference Rate (GRR) has also fallen to 17.86%, signaling a broader easing of borrowing costs.
On paper, these developments suggest a clear opportunity: businesses and individuals can technically borrow at lower rates, invest in expansion, and support economic activity. The measures indicate cheaper credit and a more conducive environment for growth.
But what if, in reality, there is no money to borrow? This is the dilemma Prof. Godfred Bokpin highlights: while policy rates have fallen, the actual liquidity in the system may not be enough to support businesses and households because the Bank of Ghana’s aggressive interventions to defensively bodyguard a low exchange rate are absorbing large amounts of liquidity from the market.
On one hand, the Bank of Ghana has aggressively intervened in the market to maintain a stable exchange rate, acting to defensively bodyguard a low rate. These actions are meant to inspire confidence and demonstrate policy effectiveness.
In theory, a lower exchange rate should now make transactions smoother for businesses and households. Since taking office, the central bank has managed to bring the cedi-dollar rate down from around GH₵15 to approximately GH₵10.7, though it later swung back to GH₵12.2 before being brought down again to around GH₵10.7, reflecting their continued efforts to support stability in the market.
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On the other hand, as Prof. Bokpin warns, the aggressive defense of the exchange rate is absorbing liquidity from the financial system.
“Even though rates are lower, there is technically no money available for businesses to borrow,” he explains. The billions of cedis used to defend the currency are essentially locked in central bank interventions, leaving banks cautious and credit scarce.
Prof. Bokpin argues that the focus of policy should be on real growth indicators, how many jobs are created, how businesses expand, and how productive the economy becomes. If policymakers lose sight of these fundamentals and become overly fixated on the exchange rate, he says, what good will it ultimately do? Businesses and investors, especially those in the diaspora, care about stability, not whether the rate is artificially low or high.
According to Prof. Godfred Bokpin, the current focus on the exchange rate is producing short-term optics rather than supporting sustainable growth. He emphasizes that true economic strength should be measured by tangible outcomes such as the number of jobs created, the opportunities generated for businesses, and the overall stability that allows companies to plan, invest, and expand.
He urges policy managers to focus on measures that support sustainable growth, ensure adequate credit availability, and allow the private sector to thrive, rather than chasing symbolic victories through exchange rate manipulation.
