Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye, has urged the government to declare an immediate national emergency to stabilize the cedi.
According to Dr. Kwakye, a strong appreciation of the cedi is highly improbable, making it essential to gather collective expertise to address the issue.
“The rate of depreciation of the cedi is alarming. We know that cedi significant cedi appreciation is nearly always unlikely. The government or the next government must declare an immediate national emergency to rescue the cedi, pooling together all minds,” he wrote on his X page.
The Institute of Economic Affairs (IEA) has revealed that the cedi has depreciated by approximately 74% against the U.S. dollar over the last three years.
The local currency declined by 30.0% in 2022, followed by a 27.8% drop in 2023, and has so far fallen nearly 29% against the dollar in 2024.
The IEA described this decline as “significant by all standards.”
They further cautioned that the cedi may face additional pressures through the year. Firstly, uncertainties surrounding the upcoming elections are likely to drive demand for the dollar as a safe asset.
Secondly, the future of Ghana’s IMF program remains uncertain amid the elections, which could heighten demand for dollars due to potential policy shifts under a new administration.
Lastly, unresolved debt negotiations with non-Eurobond commercial creditors could delay future IMF disbursements and reduce foreign exchange inflows, tightening foreign currency supply in the economy.
“Indeed, the Minister of Finance [ Dr. Mohammed Amin Adam] has announced that the IMF Board will carry out the third review of Ghana’s programme on December 2, 2024. This seems quite belated since staff completed their own review in early October [2024]”, the IEA added.
The fourth is a subdued cocoa crop coupled with possible availability of limited syndicated loan in the face of COCOBOD’s expressed intention to shift to domestic financing of the crop.