By Kingsley Webora TANKEH
Dean-University of Cape Coast Business School, Prof. John Gatsi, is urging government “continue watching the market, take policy action and revise policies to ensure that they address emerging dynamics of the global and internal economy and boost our underperforming exports” – thus consolidating gains the cedi has made so far.
Speaking in an exclusive interview with Business and Financial Times (B&FT), the academic commended government for its prudent fiscal consolidation efforts and the Bank of Ghana’s firm monetary policy stance. He further urged government to sustain its “comprehensive and broadening approach to gold purchases under the Gold Board”, describing the initiative as one that “resonates well with the economy” and holds strong potential for long-term macroeconomic stability.
From May 2024 to April 2025, the Bank of Ghana stacked up 8.9 tonnes of gold, representing a 40.6% increase in its gold reserves. This took total gold reserves at the central bank from 22.3 tonnes to 31.2 tonnes in about a year.
Ghana also exported 30,479.5kg of gold worth US$2.7 billion from January to April 2025, according to data from the Gold Board (Goldbod).
This marks a significant increase from US$862.4million recorded in the same period last year.
Initiatives such as Gold for Reserves and Gold for Oil helped to beef-up the country’s gold and foreign exchange reserves.
Fiscal reforms under the ongoing IMF programme, anticipation of the US$370million disbursement and abolition of nuisance taxes like the E-levy coupled with prudent expenditure cuts have enhanced fiscal credibility.
The suspension of external debt servicing also provided some crucial breathing room on foreign reserves, with the next major payment due in July 2025. This has reduced pressure on foreign exchange reserves.
“Fiscal discipline in terms of expenditure control should continue,” Prof. Gatsi encouraged.
The renowned academic touted the Bank of Ghana’s tight monetary stance as a significant contributor to recent gains and said it should be maintained as the economy slowly regains its feet.
The Bank of Ghana’s Monetary Policy Committee (MPC) increased the policy rate by 100 basis points from 27 percent to 28 percent on March 28, 2025, marking the first increase in a while.
The central bank’s injection of US$490million into the forex market in April 2025 further supported the currency’s remission.
The call came after the cedi staged a remissive bout against the dollar and other major trading currencies, appreciating about 16 percent against the dollar, according to Bloomberg.
The cedi was named ‘best performing currency in the world’ for the month of May by Bloomberg.
On the interbank market, the cedi is trading at GH¢12.22 to US$1, GH¢16.32 to £1 and GH¢13.73 to €1.
The Minister of Finance, Dr. Cassiel Ato Forson, explained earlier that this positive trend in the exchange market is underpinned by sound economic planning and strategic interventions.
“The stability and appreciation you are witnessing is not a knee-jerk reaction; it is the product of careful, well-thought-out planning,” he was quoted as saying at a meeting with leadership of the Food and Beverage Association-Ghana (FABAG).
However, how sustainable are the gains?
Touching on how sustainable the gains are, Prof. Gatsi maintained that: “It is not possible to have the cedi appreciating all the time,” highlighting the need for continuous effort to reach a “point of stability”.
“We want to see that the cedi’s direction is certain, stable and can be maintained for a long period to ensure we do not occasion the difficulties of a volatile currency,” Prof Gatsi stressed.
“We have to reach a plateau and that is our point of stability. We want the cedi to get to a point, even if it is GH¢10. Then after that we will see it moving around GH¢9.8, GH¢9.7, GH¢10.1 or GH¢10.2 – so that we know it is stabilised at around GH¢10 to US$1,” he noted.
According to him, this will help bring sanity to the economy, aiding businesses and government plan effectively to prevent overruns.
While some experts attribute recent appreciation of the cedi against major trading currencies to global economic shifts – such as trade tensions between the United States and other major economies like China, as well as recession concerns that have weakened the dollar – Professor Gatsi contends that this narrative is not entirely accurate.
He argued: “The tariff war alone does not automatically contribute to the Ghanaian economy’s benefit.
“It is only when you have a cogent and formidable internal policy framework that you can take advantage of global developments,” he added.
Gold and cocoa, being Ghana’s major exports, accounted for 63.7 percent of the country’s total exports in 2024. Their combined export value was GH¢215.57billion from a total export value of GH¢250.2billion.
In view of this, the hike in gold and cocoa prices will have a positive impact on the cedi.
Gold price has reached US$3,222 per ounce and cocoa price hit US$10,906 per tonne according to Reuters, significantly boosting foreign exchange inflows.
Meanwhile, inflation has declined for four consecutive month – having eased significantly from the 23.8 percent recorded in December 2023 to 21.2 percent in April 2025.
The World Bank has projected inflation dropping to 17.2 percent in 2025. Despite the fact that this is way higher than Ghana’s IMF programme target of 15 percent, government is targetting slashing inflation to 11.9 percent by year-end.
Commenting further, Prof. Gatsi emphasised “the need for us to produce what we consume to reduce our overdependence on imports”, which has dire implications for inflation and the cedi’s stability.
“We need to step up the effort to increase domestic production by creating an environment that allows our businesses to operate competitively,” he said, alluding to the challenges most Ghanaian businesses face.
Very rigid regulatory demands and high production costs make goods produced in-country more expensive than imported ones.
However, despite the regulatory framework in place to ensure locally made products are of quality standard, some products cannot make it out of the country into international markets because they do not meet requisite standards.
Prof. Gatsi also called for Ghana Standards Authority to be reformed – ensuring that locally made products are fit for export to boost the country’s export portfolio and help stabilise the cedi in the long-term.
“We need to allow the regulatory regime to be reformed quickly. The Ghana Standards Authority should be up to the task, so that when they assess our standards they can meet international standards,” he said.
“We need to speed up exports with value addition and promote the consumption of made in Ghana products,” he stressed.
While commenting on the call by trade unions to reduce prices of their products following the cedi’s appreciation in value against the dollar, the professor acknowledged that: “Some businesses have started reducing their prices. This will have an effect on inflation and cost of living going forward.
“It’s not surprising that businesses are responding in terms of reducing their prices; some will follow later,” he added.
According to him, this underscores the confidence and reliability currency gains have brought to the business community in Ghana.
“If businesses have the belief that this will be the case for some time, then it is easy for them to heed the call,” he concluded.
