Professor Godfred Bokpin attributes the recent resurgence of the Ghanaian cedi to decisive leadership and the implementation of challenging but necessary policy decisions. He argues that the coordinated efforts of the Finance Minister and the Governor of the Bank of Ghana have been instrumental in steering the cedi towards recovery. This collaborative approach, he believes, demonstrates strong leadership at the highest levels of government and a willingness to make difficult choices for the long-term benefit of the economy. This perspective counters narratives attributing the cedi’s improvement solely to policies enacted by the previous administration, highlighting instead the current government’s proactive interventions in a short timeframe.
Professor Bokpin identifies two pivotal policies contributing to the cedi’s positive trajectory: fiscal restraint and a shift away from excessive monetary interventions. He criticizes the previous approach of injecting excessive liquidity into the economy through high spending, particularly during the COVID-19 period. He contrasts this with the current government’s efforts to curb wasteful expenditure and implement a more gradual fiscal consolidation, a strategy economists had advocated for since the onset of the pandemic. This fiscal discipline, albeit painful in the short term, is now yielding positive results in terms of currency stabilization. He emphasizes that this fiscal consolidation is a corrective measure addressing the economic imbalances accumulated over the past few years.
Furthermore, Professor Bokpin criticizes the Bank of Ghana’s previous reliance on excessive monetary interventions, which he argues exacerbated inflationary pressures and deepened poverty. He points out that the influx of liquidity in 2022 fueled inflation, pushing a significant portion of the population, estimated at over 800,000 people, into poverty. The current administration’s move away from this approach, coupled with fiscal tightening, has created a more stable macroeconomic environment conducive to currency appreciation. This shift in monetary policy signals a recognition of the detrimental effects of excessive liquidity injections and a commitment to more sustainable economic management.
However, Professor Bokpin also acknowledges the challenges faced by the government in meeting key International Monetary Fund (IMF) targets. While commending the achievement of GDP growth and maintaining international reserves, he points out that the government fell short of the primary surplus target, recording a negative surplus instead of the targeted 0.5% of GDP. This misstep highlights the difficulties inherent in navigating economic recovery while simultaneously adhering to stringent fiscal targets. It also underscores the need for continued vigilance and adjustments to ensure long-term economic stability.
Despite this shortfall, Professor Bokpin praises the adjustments made in the 2025 budget, viewing them as a crucial corrective step to bring the IMF program back on track and restore macroeconomic stability. He notes that the budget aims to shift from a negative surplus exceeding 3% of GDP to a positive primary balance of 1.5% of GDP. This ambitious target demonstrates the government’s commitment to fiscal consolidation and its willingness to take the necessary measures to meet its obligations under the IMF program. This corrective action, according to Professor Bokpin, is essential for regaining investor confidence and fostering sustained economic growth.
In conclusion, Professor Bokpin paints a picture of a Ghanaian economy undergoing a necessary, albeit painful, adjustment process. The cedi’s recent appreciation, while encouraging, comes at the cost of reduced public spending and slower growth. The government’s decision to prioritize macroeconomic stability over rapid growth reflects a long-term vision that prioritizes sustainable economic development. This trade-off, while potentially unpopular in the short term, is viewed by Professor Bokpin as a necessary step to cool down an overheating economy and lay the foundation for future prosperity. He emphasizes that the reduced government expenditure, a significant GHC10 billion less than in 2024, is a direct consequence of the necessary measures taken to stabilize the economy and control inflation. This approach, he argues, demonstrates a commitment to responsible economic management and a willingness to make difficult choices for the greater good.
