An economist and finance expert, Professor Godfred Bokpin, has linked some of the cedi’s devaluation to the International Monetary Fund‘s (IMF) program with Ghana.
He explained that during the IMF program, the Central Bank was restricted from intervening in the currency exchange market when the cedi depreciated against major trading currencies.
This restriction hindered the Bank of Ghana (BoG) from participating in the foreign currency market to stabilize the cedi.
Prof. Bokpin made these remarks during an interview on a local radio station, which was monitored by the Ghana News Agency (GNA) over the weekend.
“Part of the reason the cedi is depreciating is also consistent with the latest IMF-supported program. Under the IMF-supported programme, they favour a stable exchange rate.
“This limits the ability of the central bank to be in the market and fight off the depreciation through our reserves.
“Part of the IMF programme is to build our reserve of three months of import cover for 2026…What that means is that it tightens the hands of the central bank to intervene in the market to sell dollars to stabilise the cedi.
“Now they cannot do that under an IMF programme,” he said.
In May 2023, the IMF Executive Board sanctioned a US$3 billion External Credit Facility (ECF) with Ghana spanning 36 months.
Prof. Bokpin further pinpointed additional factors influencing the recent depreciation of the cedi.
He noted that the currency’s devaluation was also sparked by the delayed restructuring of foreign debt, impacting the disbursement of the third tranche of the ECF within the IMF program.
Despite Ghana’s failure to reach a final debt agreement with its official bilateral creditors, the IMF has pledged to disburse the third tranche amounting to $360 million.
During the discussion, Mr. Charles Kusi Appiah Kubi, a representative of the Ghana Union of Traders Association (GUTA) and a panelist, proposed prioritizing retention policies to stabilize the cedi, as multinational companies might face restrictions on repatriating profits.
Dr. Kwabena Nyarko Otoo, Director of Research for the Trade Union Congress, also urged the Central Bank to tackle the unregulated foreign exchange trade in Ghana, particularly in the black market, to alleviate pressure on the cedi.