The African Development Bank (AfDB) has recommended that the Bank of Ghana (BoG) adopt a new exchange rate policy to alleviate pressure on the Cedi.
In its latest report, “Driving Ghana’s Transformation: The Reform of the Global Financial Architecture,” the AfDB advises the central bank to allow the Cedi to adjust more freely to macroeconomic changes.
The AfDB argues that resisting these adjustments could undermine economic growth.
The report emphasizes that Ghana’s macroeconomic stability is expected to improve gradually, with projected stabilization in growth, inflation, and exchange rates.
However, it also stresses the importance of implementing short-term and long-term measures to solidify economic reforms and drive structural transformation.
Short-term recommendations include maintaining a restrictive monetary policy to combat inflation and supporting domestic supply responses through infrastructure and human capital investments.
The AfDB suggests that the BoG should allow the Cedi to fluctuate based on macroeconomic fundamentals to foster growth.
The report also highlights the need for continued fiscal consolidation.
It calls for reducing Ghana’s substantial debt burden, which stood at GH¢742 billion (approximately US$50.9 billion) as of June 2024, through increased domestic resource mobilization and completion of external debt restructuring.
The AfDB recommends enhancing the business environment to attract private investment, tackling corruption, and improving tax administration for medium to long-term strategies.
The report advocates for structural reforms to simplify business regulations and boost economic governance.
The AfDB urges Ghana to adopt a comprehensive approach to economic management, balancing short-term measures with long-term structural reforms to ensure sustainable growth and stability.
