The Ghanaian cedi appreciated by 20.23% against the US dollar and by 20.23% against the pound sterling in the first half of 2024, compared to depreciations of 27.8% and 34.1%, respectively, during the same period in 2023.
ISSER attributes these improvements to the IMF Extended Credit Facility (ECF) program, which has compelled both monetary and fiscal authorities to adhere to a disciplined fiscal and monetary framework.
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However, ISSER stresses the need for further measures to stabilize the exchange rate. The review recommends assessing the size of the informal forex market and taking steps to reduce its influence, as well as clamping down on unregistered and unregulated businesses through collaboration between the Bank of Ghana and law enforcement agencies.
The review also notes a slower growth in money supply in 2024, which is linked to a lower increase in Net Domestic Assets (NDA). Total liquidity growth has decelerated, with money supply growing by 34% in 2024, down from 44.4% in 2023. This trend highlights the necessity for effective coordination between monetary and fiscal policies to maintain macroeconomic stability and growth.
ISSER advises that the Bank of Ghana and fiscal authorities should enhance their collaboration with global and regional financial institutions, development partners, and the private sector to unlock resources needed for sustaining economic recovery.
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Furthermore, ISSER suggests that the Development Bank of Ghana should offer more affordable funding to the agricultural and light manufacturing sectors to boost local industry’s capacity to produce import substitutes and enhance export competitiveness.
By addressing unregistered and unregulated forex activities and implementing these recommendations, ISSER believes that the Bank of Ghana can further stabilize the exchange rate, promote price stability, and support sustainable economic growth.
