By Kingsley Webora TANKEH
In a recent exclusive interview with the Business and Financial Times (B&FT), Prof. John Gatsi, Dean of the University of Cape Coast Business School, provided a comprehensive analysis of Ghana’s economic landscape, particularly focusing on the recent appreciation of the cedi against major currencies. His insights underscore the importance of strategic policy actions to sustain this positive trend and bolster the nation’s economic stability.
The Current Economic Climate
Prof. Gatsi commended the Ghanaian government for its prudent fiscal consolidation efforts and the Bank of Ghana’s firm monetary policy stance. He emphasized the need for continuous monitoring of the market dynamics, urging the government to revise policies that address both global and internal economic challenges. This proactive approach is essential for consolidating the gains made by the cedi, which has recently shown remarkable resilience.
From May 2024 to April 2025, the Bank of Ghana significantly increased its gold reserves by 40.6%, accumulating 8.9 tonnes and bringing the total to 31.2 tonnes. This strategic move aligns with the government’s broader economic initiatives, including the Gold for Reserves and Gold for Oil programs, which have bolstered the country’s foreign exchange reserves.
Export Performance and Fiscal Reforms
Ghana’s export performance has also seen a notable uptick. Between January and April 2025, the country exported 30,479.5 kg of gold, valued at approximately US$2.7 billion—an impressive increase from US$862.4 million during the same period the previous year. This surge in gold exports is crucial for enhancing the nation’s foreign exchange inflows and stabilizing the cedi.
Prof. Gatsi highlighted the impact of fiscal reforms under the ongoing IMF program, including the anticipated US$370 million disbursement and the abolition of nuisance taxes like the E-levy. These measures have improved fiscal credibility and provided the government with more room to maneuver in managing its finances. The suspension of external debt servicing has also alleviated pressure on foreign reserves, allowing for a more stable economic environment.
The Role of Monetary Policy
The Bank of Ghana’s tight monetary policy has played a pivotal role in the recent appreciation of the cedi. In March 2025, the Monetary Policy Committee raised the policy rate from 27% to 28%, marking a significant shift in monetary strategy. Additionally, the central bank injected US$490 million into the forex market in April 2025, further supporting the cedi’s recovery.
As a result, the cedi appreciated by approximately 16% against the dollar, earning the title of ‘best performing currency in the world’ for May, according to Bloomberg. Currently, the cedi trades at GH¢12.22 to US$1, GH¢16.32 to £1, and GH¢13.73 to €1.
Sustainability of Gains
While the recent gains are commendable, Prof. Gatsi cautioned against complacency. He emphasized that continuous efforts are necessary to achieve a stable currency environment. “It is not possible to have the cedi appreciating all the time,” he noted, advocating for a “point of stability” where the cedi can maintain a consistent value, ideally around GH¢10 to US$1. This stability is crucial for businesses and government planning, helping to prevent economic volatility.
Global Economic Influences
Some analysts attribute the cedi’s recent strength to global economic shifts, such as trade tensions between the U.S. and other major economies. However, Prof. Gatsi argued that a robust internal policy framework is essential for Ghana to capitalize on these global developments. He stressed that the benefits of international trade dynamics cannot be realized without a solid domestic economic strategy.
The Importance of Domestic Production
Prof. Gatsi also highlighted the need for Ghana to enhance its domestic production capabilities to reduce reliance on imports, which can negatively impact inflation and currency stability. He called for a more competitive environment for local businesses, emphasizing the importance of reforming the regulatory framework to ensure that locally produced goods meet international standards.
The Ghana Standards Authority, he argued, must be reformed to facilitate the export of locally made products, thereby boosting the country’s export portfolio and contributing to long-term cedi stability.
The Impact of Price Reductions
In light of the cedi’s appreciation, some businesses have begun reducing their prices, which could positively affect inflation and the cost of living. Prof. Gatsi noted that this trend reflects the confidence that currency gains have instilled in the business community. If businesses believe in the sustainability of these gains, they are more likely to adjust their pricing strategies accordingly.
Conclusion
Prof. John Gatsi’s insights provide a comprehensive overview of the current economic landscape in Ghana. His emphasis on the need for strategic policy actions, fiscal discipline, and enhanced domestic production highlights the multifaceted approach required to sustain the cedi’s gains and foster long-term economic stability. As Ghana navigates these challenges, the collaboration between government, financial institutions, and the private sector will be crucial in shaping a resilient economic future.
English 