Ghana’s Finance Minister, Dr. Cassiel Ato Forson, recently addressed Parliament regarding the performance of the Ghanaian Cedi against major trading currencies, particularly the US dollar. He emphasized the relative stability of the Cedi since February 19, 2025, attributing this to the government’s proactive measures and the Central Bank’s tight liquidity management. As of March 14, 2025, the Cedi stood at GHS 15.53 to the dollar, representing a 5.3% depreciation, a slight improvement compared to the 5.7% depreciation recorded during the same period in the previous year. This stability, according to the Minister, is a testament to the efficacy of the government’s ongoing efforts to bolster the currency’s resilience.
The Finance Minister elaborated on the multi-pronged approach adopted by the government to stabilize the Cedi. Key among these strategies is the establishment of the Gold Board, an initiative aimed at leveraging Ghana’s gold reserves to bolster the country’s foreign exchange reserves. This move is crucial in enhancing the availability of foreign currency on the forex market, thereby mitigating the pressure on the Cedi. Furthermore, the government is actively pursuing policies aimed at reducing its expenditures. This fiscal discipline is considered essential in stabilizing the macroeconomic environment and maintaining investor confidence, both of which contribute to a stronger currency.
Another important policy direction highlighted by Dr. Forson is the implementation of the “24-hour economy” initiative. This comprehensive strategy encompasses various measures, including import substitution policies, designed to reduce the reliance on imported goods and promote local production. By stimulating domestic industries and reducing the demand for foreign currency, the government aims to further bolster the Cedi’s resilience on the forex market. This concerted effort to enhance local production capacity is expected to have a positive knock-on effect on the balance of trade, ultimately contributing to a stronger Cedi.
The Central Bank’s tight liquidity measures have also played a significant role in stabilizing the Cedi on the interbank forex market. By controlling the money supply, the Central Bank aims to manage inflation and maintain price stability, which are key factors in influencing exchange rates. This monetary policy approach, in conjunction with the government’s fiscal policies, is designed to create a stable macroeconomic environment conducive to a stronger currency. The Minister’s remarks highlight the coordinated efforts of both fiscal and monetary authorities in addressing the challenges facing the Cedi.
Dr. Forson’s parliamentary address provides a comprehensive overview of the government’s strategies to address the Cedi’s volatility and ensure its stability. The emphasis on a multi-faceted approach, combining fiscal discipline, strategic gold reserve utilization, and import substitution policies, underscores the government’s commitment to bolstering the currency. The initial signs of success, with the Cedi experiencing a lower depreciation rate compared to the previous year, provide a positive outlook. However, the long-term effectiveness of these measures will depend on consistent implementation and ongoing monitoring of the macroeconomic environment.
The government’s focus on a holistic approach, including the implementation of a 24-hour economy and active liquidity management by the Central Bank, demonstrates a proactive stance towards addressing the challenges and ensuring the Cedi’s long-term stability. While the initial results are encouraging, the government’s commitment to sustained implementation and adaptation of these policies will be crucial in determining the long-term success of these measures. The ultimate goal is to achieve a resilient and stable Cedi that supports economic growth and development in Ghana. The ongoing monitoring and evaluation of these policies will be crucial in ensuring they remain effective and responsive to the evolving economic dynamics.
