Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA), has raised concerns that the recent appreciation of the Ghanaian cedi against major currencies, particularly the US dollar, may be a deliberate strategy by the Bank of Ghana (BoG) ahead of the country’s upcoming elections.
Kwakye suggested that the gains seen in the cedi are not necessarily due to improved economic fundamentals, but rather an orchestrated effort to boost confidence in the local currency as the election approaches. “The real test will come after the election,” he said in a post on his X (formerly Twitter) page.
His remarks come in contrast to a statement by the Bank of Ghana, which attributed the cedi’s recent gains to positive developments in the country’s external sector. According to the central bank, Ghana’s external position has significantly improved this year, driven by a higher current account surplus and a reduction in net financial outflows.
The BoG reported that Ghana’s current account surplus had increased to US$2.2 billion in the first nine months of 2024, up from US$912 million during the same period in 2023. This improvement has been largely attributed to stronger exports of gold and crude oil, as well as robust remittance inflows.
Additionally, the country saw a decrease in net financial outflows, with a net outflow of US$414 million, compared to US$1.4 billion in the same period last year. These developments have contributed to a positive balance of payments position, with reserves rising by over US$1.91 billion to US$7.83 billion by the end of September 2024—equivalent to 3.5 months of import cover.
The BoG’s Monetary Policy Committee highlighted that the positive performance of the external sector has bolstered confidence in the foreign exchange market, leading to the cedi’s recent appreciation. As of November 22, 2024, gross reserves had further increased to US$7.92 billion.
Despite the BoG’s optimism, Kwakye’s comments suggest that many will be watching the cedi’s performance closely after the election, when the political influence may subside, to see if the currency’s gains are sustainable in the long term.
