The World Bank has added its voice to Ghana’s management of the cedi, cautioning the government against excessive interventions in the foreign exchange market.
The warning from this Bretton Woods institution comes months after the International Monetary Fund (IMF) expressed similar concern over what appeared to be an excessive forex market intervention by the Bank of Ghana.
The IMF earlier indicated that the enormous footprint the BoG was leaving on the forex market was very risky. For the IMF, using scarce reserves to artificially prop up the cedi has serious consequences for the medium to long term.
In its latest 2025 World Bank Policy Notes on Ghana, the bank added its voice to the situation, indicating that while such interventions can provide short-term relief to businesses and consumers worried about rising prices, the long-term consequences are far more damaging.
The Bank stressed that “the most pressing priority” is not to burn reserves in the forex market, but to build enduring credibility by fixing fiscal imbalances and strengthening growth fundamentals.
It added that repeated interventions may soothe nerves temporarily but ultimately undermine competitiveness, choke long-term growth, and derail the structural transformation the country desperately needs.
It pointed to Ghana’s own history after the HIPC debt relief initiative, when short-lived stability quickly gave way to fresh boom-and-bust cycles because the underlying fiscal discipline never took root.
“The most pressing priority would be to establish enduring credibility by strengthening fiscal and growth fundamentals rather than precipitously reentering the Eurobond market or substantially intervening in the foreign exchange market to bolster the value of the Ghanaian cedi,” the World Bank noted in the document cited by The High Street Journal.
It continued that, “While the latter may yield immediate relief, it ultimately undermines competitiveness, hinders long-term growth, and is detrimental to structural transformation.”
The Policy Notes further recommends that Ghana focus on achieving steady primary fiscal surpluses before debt payments. This, the Bank argues, is the only way to prove to markets, businesses, and citizens that public debt is on a sustainable path.
By doing so, the government would send a powerful signal that Ghana is breaking with its past cycles of excess and crisis, and is serious about building a credible, stable cedi.
Many economists explain that when the cedi is artificially defended, imports may look cheaper for a while, but sooner or later, the reserves run out, the cedi crashes even harder, and prices shoot up at the market. Traders face unpredictable costs, transport operators are squeezed by unstable fuel prices, and households watch their purchasing power evaporate.
