Cedi Stability Outlook for 2026

Courage Boti, Manager of Macroeconomic Research at GCB Bank PLC, forecasts the Ghanaian cedi will remain stable in 2026. He made this assessment during a recent economic briefing in Accra. Boti expects no significant appreciation for the currency in the near term. He cites improving macroeconomic stability as the primary factor supporting this outlook.

Boti explained that Ghana's economic fundamentals have strengthened considerably. The country secured a $3 billion Extended credit Facility from the International Monetary Fund in May 2023. This program runs through 2026. Ghana also completed a domestic debt exchange program in February 2023. These measures have helped stabilize the economy.

Why Stability Matters

Currency stability directly impacts business operations across Ghana. Importers face predictable costs when the cedi remains steady. Exporters can plan revenue without sudden currency fluctuations. The Ghana Statistical Service reported inflation dropped to 23.1% in December 2023 from 54.1% in December 2022. This decline supports Boti's stability argument.

Manufacturing companies like Unilever Ghana PLC benefit from stable exchange rates. They import raw materials for production. A stable cedi helps them manage input costs. Agricultural exporters like Blue Skies Holdings Limited also gain from predictable exchange rates. They export fresh fruits to European markets.

Economic Context and Government Actions

The Bank of Ghana has implemented several measures to support currency stability. The central bank maintained its policy rate at 29% in January 2024. This rate has held steady for three consecutive meetings. The Bank of Ghana also increased its foreign reserves to $5.8 billion in December 2023. This represents 2.7 months of import cover.

Ghana's Finance Ministry projects the fiscal deficit will narrow to 4.8% of GDP in 2024. This follows a deficit of 11.8% in 2022. The government aims to reduce the deficit further to 3.5% by 2026. These fiscal improvements contribute to macroeconomic stability.

What Businesses Should Watch

Companies operating in Ghana should monitor several key indicators. The Bank of Ghana's monetary policy decisions will influence currency stability. The next policy rate announcement comes in March 2024. Businesses should also track Ghana's progress with IMF program targets. The third review of the $3 billion program occurs in June 2024.

Export-oriented businesses should watch global commodity prices. Cocoa prices reached $4,200 per metric ton in January 2024. This represents a 65% increase from January 2023. Gold prices remain above $2,000 per ounce. These export revenues support Ghana's balance of payments.

Import-dependent companies should monitor fuel prices. The National Petroleum Authority adjusts petroleum prices every two weeks. Diesel prices increased by 2.5% in January 2024. This followed a 4.8% increase in December 2023. Fuel costs affect transportation and production expenses.

Sector-Specific Impacts

The stability forecast affects different sectors in distinct ways. The construction industry relies heavily on imported materials. Companies like Consar Limited import cement and steel. A stable cedi helps them budget for major projects. The Ghana Highway Authority plans to award contracts worth GH₵2.5 billion ($200 million) in 2024.

Telecommunications companies face both opportunities and challenges. MTN Ghana Limited reports earnings in cedis but pays equipment costs in dollars. Currency stability reduces their foreign exchange risk. The company invested $150 million in network expansion in 2023.

Tourism operators benefit from predictable exchange rates. The Ghana Tourism Authority reported 1.2 million international arrivals in 2023. This represents a 46% increase from 2022. Hotels like Kempinski Hotel Gold Coast City Accra price rooms in dollars but collect payment in cedis.

Regional Comparisons

Ghana's currency outlook compares favorably with some regional peers. The Nigerian naira depreciated by 49% against the dollar in 2023. The Kenyan shilling lost 27% of its value during the same period. Ghana's cedi depreciation slowed to 15% in 2023 from 40% in 2022.

The West African Monetary Zone continues discussions about a common currency. The Eco would replace national currencies in Ghana and seven other countries. Implementation faces delays beyond the original 2027 target. This regional context influences Ghana's currency management approach.

Looking Ahead

Boti's stability forecast depends on continued economic discipline. Ghana must maintain its IMF program commitments. The government needs to implement revenue measures from the 2024 budget. These include the proposed 2.5% increase in the Value Added Tax rate.

Businesses should prepare for gradual improvements rather than sudden changes. The cedi's stability in 2026 would mark three years of relative calm. This follows the volatility of 2022 when the currency lost 40% of its value. Companies that survived that period now operate with greater caution.

The ultimate test will come during Ghana's election period in December 2024. Election years often bring fiscal pressures. The government has committed to maintaining economic stability through this period. Businesses will watch spending patterns closely in the coming months.