The Institute of Economic and Research Policy Promotion (IERPP) says it has been vindicated by the IMF’s caution to the government over its controlled stability of the cedi.
The Executive Board of the IMF, in its fourth review under the Extended Credit Facility Arrangement with Ghana, expressed concern on how the government has been pumping into the forex to support Ghana’s currency against foreign currencies instead of allowing market factors to determine the cedi stability.
“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, including by adopting a formal internal FX intervention policy framework,” the IMF said.
In a statement, signed by its Executive Director, Prof Isaac Boadi, who is also the Dean, Faculty of Accounting and Finance, UPSA, the IERP said it offered similar caution to government but it’s advice fell on death ears.
“These warning from IMF did not validate but vindicates what the Institute for Economic, Research and Policy Promotion (IERPP) echoed the same concerns,” the IERPP disclosed in a statement.
The IERPP noted that “the government was deliberately injecting large amounts of dollars into the system to prop up the cedi’s value”.
“While this may make the currency look stable in the short term, it distorts market dynamics, encourages cheap imports, and hurts local production — a toxic combination for long-term economic health.”
”To date, BoG has not adopted a clear, published FX intervention framework. Its market operations remain ad hoc and opaque, leading to uncertainty and speculation.
“Instead of allowing the exchange rate to reflect actual market forces, the BoG continued aggressive dollar sales, particularly during sensitive periods. This short-term tactic masked deeper economic issues, exactly what both institutions cautioned against.”
It added; “Despite these aligned warnings, the actions taken by the BoG and government show a clear disregard for both the IMF and IERPP advice.”
Read the IERPP’s full statement below:
Advised but unmoved: The IERPP, and BoG’spolicy disconnect
The IMF offered sound advice, IERPP gave a political warning, perhaps that’s exactly why BoG and the government chose not to listen to IERPP.
July 7, 2025, IMF Executive Board Completes the Fourth Review under the Extended Credit Facility Arrangement with Ghana. In paragraph 17, IMF states:
“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, including by adopting a formal internal FX intervention policy framework.”
The IMF urged the Bank of Ghana (BoG) to do three critical things:
“The Bank of Ghana should maintain an appropriately tight monetary stance until inflation returns to its target…”
Keep interest rates high enough to bring inflation back to the Bank’s official target. Easing too soon could allow inflation to spiral again.
“…reduce its footprint in the foreign exchange market…”
The BoG should stop frequently selling U.S. dollars in the market just to stabilize the cedi. Constant intervention distorts market signals and can drain precious reserves.
“…and allow for greater exchange rate flexibility…”
The Bank should allow the cedi to move more freely in response to supply and demand, rather than trying to fix or heavily manage its value.
“…including by adopting a formal internal FX intervention policy framework.”
The Bank of Ghana should have a clear, rules-based policy for when and how it intervenes in the FX market, rather than acting unpredictably.
These warning from IMF did not validate but vindicates what the Institute for Economic, Research and Policy Promotion (IERPP) echoed the same concerns. Their message was blunt:
“The cedi’s strength is artificial.”
IERPP claimed the government was deliberately injecting large amounts of dollars into the system to prop up the cedi’s value. While this may make the currency look stable in the short term, it distorts market dynamics, encourages cheap imports, and hurts local production — a toxic combination for long-term economic health.
To date, BoG has not adopted a clear, published FX intervention framework. Its market operations remain ad hoc and opaque, leading to uncertainty and speculation. Instead of allowing the exchange rate to reflect actual market forces, the BoG continued aggressive dollar sales, particularly during sensitive periods.
This short-term tactic masked deeper economic issues, exactly what both institutions cautioned against. Despite these aligned warnings, the actions taken by the BoG and government show a clear disregard for both the IMF and IERPP advice
Author:
Prof. Isaac Boadi
Dean, Faculty of Accounting and Finance, UPSA
Executive Director, Institute of Economic and Research Policy, IERPP
AME
