Adnan Adams Mohammed
The Africa Policy Lens (APL), a new entrant in the policy think-tank space, has cautioned the managers of the economy to avoid complacency as the local currency – the Cedi – is witnessing a short-term appreciation.
The research and policy analysts group, in a press statement issued last week, emphasized the need for continued reforms, urging the government to build on current momentum with permanent policy measures aimed at fiscal discipline, export diversification, and institutional transparency.
The Cedi has appreciated by over 20% against the US dollar so far this year, making it one of the best-performing currencies globally. As of early-May 2025, the Cedi was trading at approximately GH¢13.5 to the dollar, reflecting a 17% gain since January, APL noted.
“Short-term gains should not lull policymakers into inaction,” the group cautioned. “Sustainable growth depends on deep, structural reforms.”
Meanwhile, the group highlighted factors that have accounted for the significant appreciation of the Ghanaian Cedi in recent months, making a notable turnaround after a difficult 2024. It cited a combination of factors including the government’s fiscal consolidation measures like a sharp reduction in public spending, suspension of new projects, and a freeze on the clearance of arrears which have helped reduce pressure on the currency.
“The Ministry of Finance is reported to have held back payments worth about GH¢69 billion pending audit,” APL stated, “effectively curbing excess demand for foreign exchange.”
At the same time, the Bank of Ghana (BoG) has played a central role through strategic interventions. Through the Domestic Gold Purchase Programme (DGPP), the BoG accumulated gold reserves that were later used to support the Cedi via gold-backed foreign exchange operations. Between January and May 2025, the central bank injected nearly US$1 billion into the forex market.
“This included US$490 million in April alone and US$264 million in March,” APL noted, “which helped improve dollar liquidity and ease depreciation pressure.”
“Drawing down reserves and delaying payments are not long-term solutions,” the think tank stressed however.
APL also acknowledges the influence of external factors such as the weakening of the US dollar amid global trade tensions, which have contributed to the Cedi’s recent gains.
APL further pointed out that Ghana has seen similar periods of stability before, particularly between 2017 and 2019 during the IMF Extended Credit Facility program. During that time, the Cedi was relatively stable due to improved fundamentals, disciplined fiscal policy, and external conditions such as rising oil production and commodity prices, thereby suggesting that today’s policymakers can learn from that period by focusing on long-term reforms instead of relying on interventions.
“There are lessons from the past—particularly the 2017–2019 period—that show sustainable stability must be anchored in strong fundamentals, not ad hoc measures,” the organisation stated.
Consequently, it indicated that analysts such as S&P Global Ratings and Fitch Solutions have already warned that the Cedi could face renewed depreciation in the second half of 2025 if structural imbalances resurface.
“Global credit watchers are already flagging risks, and Ghana must act swiftly to insulate itself from renewed pressures,” APL emphasised.
APL calls for stronger policy action, including the completion of debt restructuring, diversification of export revenue sources, and improved fiscal management. It also emphasizes the importance of transparent communication from government institutions to maintain investor confidence.
“To maintain the current momentum, reforms must be bold, and communication must be clear to avoid spooking markets,” the group stated.
In conclusion, APL states that while Ghana’s currency has shown impressive recovery, “the challenge now is to ensure these gains are not only preserved but built upon,” reiterating that “without long-term reforms, the current stability may not hold.”
