By: Franklin ASARE-DONKOH
Member of Parliament (MP) for Okaikwei Central in the Greater Accra Region, Patrick Yaw Boamah, has admonished the John Mahama-led government to enforce stricter fiscal discipline to ensure the stabilisation of the Cedi.
According to him, the recent appreciation of the Ghanaian currency (the Cedi) against the U.S. dollar could be short-lived without firm fiscal measures and confidence-building efforts.
Speaking in an interview on the sidelines of the International Monetary Fund (IMF) and World Bank (WB) Spring Meetings held in Washington, D.C., the Okaikwei Central lawmaker welcomed the Cedi’s improved performance—from around GHS15 to approximately GHS14 per dollar—but quickly added that the gains could be eroded due to deep-rooted structural challenges in the financial sector.
“As someone who follows the economic space closely, I believe confidence is key. The attitude and credibility of economic managers have a direct impact on how investors perceive the future of the Cedi,” Mr. Boamah emphasised.
He pointed to an expected disbursement of over $300 million from the IMF as a short-term buffer to support Ghana’s foreign reserves and temporarily stabilize the local currency.
“Yes, this funding will boost reserves and can help restore some level of market confidence. But we must not be deceived into thinking that this alone guarantees long-term stability,” the MP stated.
Mr. Boamah also drew attention to what he described as a looming fiscal crisis, stressing that the government has GH¢18 billion in unpaid arrears.
He warned that any sudden move to clear these backlogs by injecting large sums into the economy could exert significant downward pressure on the Cedi.
“These arrears have gone unpaid for six months. If the government suddenly starts releasing funds to pay contractors and service providers, the currency could suffer due to excess liquidity,” he cautioned.
The MP questioned the integrity of the recent Cedi appreciation, suggesting it may not be driven by genuine economic improvements.
“Is this recovery organic or artificial? That’s the question we must ask. If it’s not underpinned by solid fundamentals, it won’t last,” he stressed.
Beyond domestic risks, Mr. Boamah flagged external threats, including U.S.-China trade tensions and global currency movements, which could further destabilize the Cedi.
He noted that the global environment plays a significant role in shaping Ghana’s exchange rate dynamics, citing recent IMF and World Bank data that show Ghana’s economic projections are already being downgraded.
“We had a projected growth rate of 5.7% for 2024, but it’s been revised down to 3.9%. Our debt-to-GDP ratio stands at 61.8%, and these figures reflect the underlying vulnerabilities.
This brief appreciation of the Cedi should not be mistaken for a turnaround. The real test lies ahead—how the government manages its debt, addresses arrears, and restores investor confidence will determine whether the currency holds or falters,” the MP noted.
