Financial policy advocate Patrick Yaw Boamah is warning about the country’s fragile economic stability, cautioning that the recent appreciation of the Cedi against the U.S. dollar could be short-lived without strict fiscal discipline and robust confidence-building efforts.
Speaking to George Wiafe of Joy News during the IMF/World Bank Spring Meetings in Washington, D.C., the Okaikwei Central Member of Parliament welcomed the cedi’s improved performance—from GH¢15 to around GH¢14 per dollar—but was quick to dampen optimism, citing deep-rooted structural challenges that could reverse the trend.
“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,” Boamah emphasized.
IMF Cash Inflow
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.
He said, “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.”
Hon. Boamah, however, drew attention to what he described as a looming fiscal crisis, stressing the government’s 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.
Artificial spike or real progress
The MP also 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, Patrick Boamah flagged external threats—including U.S.-China trade tensions and global currency movements—that 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, Boamah pointed out that Ghana’s economic projections are already being downgraded.
“We had a growth rate of 5.7% projected 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,” he noted.
This brief appreciation of the cedi, he said, should not be mistaken for a turnaround and that the real test lies ahead arguing that how the government manages its debt, tackles arrears, and restores investor confidence will determine whether the currency holds or falters.
By Osumanu Al-Hassan/thenewsbulletin24.com