The Institute for Economic Research and Policy Promotion (IERPP) has declared that it feels vindicated by the International Monetary Fund’s (IMF) recent criticism of the Government of Ghana’s management of the cedi, particularly through ongoing foreign exchange interventions.
In its Fourth Review under the Extended Credit Facility Arrangement with Ghana, the IMF Executive Board expressed concern about the Bank of Ghana’s (BoG) approach to stabilizing the local currency. The IMF urged the BoG to scale back its intervention in the forex market and allow the cedi to respond to market forces more freely.
“The Bank of Ghana should maintain an appropriately tight monetary stance until inflation returns to its target, reduce its footprint in the foreign exchange market, and allow for greater exchange rate flexibility,” the IMF stated.
In a strongly worded statement, IERPP Executive Director Professor Isaac Boadi, who also serves as Dean of the Faculty of Accounting and Finance at UPSA, said the IMF’s stance reaffirms the warnings the Institute issued months ago — warnings he claims were ignored by policymakers.
“These warnings from the IMF do not merely validate, but vindicate the concerns that the Institute for Economic Research and Policy Promotion (IERPP) raised earlier,” the statement read.
Artificial Strengthening of the Cedi
The IERPP accused the government and BoG of deliberately injecting large volumes of U.S. dollars into the economy to prop up the cedi, creating what it describes as an “illusion of stability.” According to the Institute, this approach has distorted market dynamics, encouraged imports, and undermined local production, worsening Ghana’s long-term economic outlook.
“While this may create an illusion of short-term stability, it distorts market dynamics, encourages cheap imports, and undermines local production — a toxic combination for long-term economic health,” Prof. Boadi stated.
Lack of Transparency in Forex Operations
The IERPP also criticized the lack of a clear and transparent foreign exchange intervention framework at the central bank. It accused the BoG of ad hoc operations that increase uncertainty in the market.
“To date, the BoG has not adopted a clear, published FX intervention framework. Its market operations remain opaque, leading to uncertainty and speculation,” the Institute warned.
The statement further alleged that the central bank’s interventions have been particularly aggressive during politically sensitive periods, hinting at the use of currency stability for political gain rather than economic necessity.
Call for Reform
Both the IMF and IERPP are urging the BoG to adopt a rules-based internal FX intervention policy, allow greater exchange rate flexibility, and focus on inflation targeting to ensure long-term macroeconomic stability.
“Despite these aligned warnings, the actions taken by the BoG and government show a clear disregard for the advice of both the IMF and IERPP,” the IERPP statement concluded.
With pressure now mounting from both international institutions and local policy analysts, observers will be watching closely to see whether the government shifts course ahead of the IMF’s next review and amid increasing public concern over Ghana’s economic trajectory.
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