At a time when the Ghana cedi’s unexpected appreciation is being heavily lauded, U.S.-based Professor of Finance at Purdue University Northwest, Prof. Pat Obi is arguing that the accompanied revenue shortfall offers yet another reason for Ghana to begin seriously weighing the long-term benefits of adopting the US dollar as legal tender.
In an exclusive comment to The High Street Journal, Prof. Obi noted that while the cedi’s recent strength may appear beneficial on the surface, it comes with unintended fiscal consequences.
As confirmed by the Minister for Finance, Dr. Cassiel Ato Forson, during the presentation of the 2025 Mid-Year Budget Review to Parliament, the government’s anticipated revenue took a hit largely because key taxes and royalties, especially from the extractive sector, are denominated in US dollars.
Import duty, which is also dollar-denominated, suffered a major dip, threatening to put the government’s fiscal projections in jeopardy.
With the cedi gaining ground, these dollar inflows convert into fewer cedis, putting pressure on budget execution and development financing.
Prof. Pat Obi, who is a strong proponent of the idea that Ghana should formally adopt the U.S. dollar as an accepted medium of exchange, maintains that the cedi appreciation-induced revenue shortfall is another strong case for dollar adoption.
“At the risk of sounding like a broken record, I suggest that it may be time to initiate a serious national conversation on the long-term benefits of formalizing the US dollar as legal tender, as has been done in several other developing economies,” he told The High Street Journal.
He added that, “While potentially unpopular, this move removes exchange rate volatility, which currently undermines fiscal projections, contract pricing, and business planning.”
Prof. Obi contends that Ghana is already informally dollarized in practice: real estate, major contracts, and even budget benchmarks are pegged to the US dollar. “Full dollarization,” he suggests, “removes exchange rate volatility, which currently undermines fiscal projections, contract pricing, and business planning.”
Critics of dollarization often cite loss of monetary sovereignty as a key risk. But Prof. Obi believes that the benefits, particularly long-term fiscal resilience, are worth considering.
He argues that adopting the dollar shifts the national economic focus away from speculative FX anxieties and toward more pressing structural reforms.
The country’s economy, he says, stands to benefit enormously which including taming domestic inflation by removing the inflationary effects of cedi depreciation, incentivizing private investment through stable macroeconomic policies and interest rates, and unlocking tourism’s potential by introducing policies such as visa-free travel, as successfully done by countries like Cape Verde, Mauritius, and Rwanda.
Admitting that this call is very controversial, Prof. Obi says it demands bold leadership to implement.
“The path to fiscal resilience lies not in chasing currency stability, but in redesigning the economy to be less vulnerable to it. This will require political will, difficult conversations, and bold reforms. But this holds the promise of a more sustainable future,” he added.
For Prof. Pat Obi, the Ghanaian economy is overly dependent on exchange rate volatility, hence the need to eliminate that by adopting the dollar as the medium of exchange.
