BoG Governor Highlights Expectations Role in Currency Stability

Bank of Ghana Governor Ernest Addison stated on Tuesday that managing market expectations is vital for maintaining the cedi's stability. The governor made these remarks during a quarterly monetary policy committee briefing in Accra. Addison noted the cedi has shown remarkable stability throughout 2025, reflecting improved investor confidence and Ghana's strengthened external position. He acknowledged recent foreign exchange pressures but characterized them as largely seasonal. The governor emphasized that expectations will now play a central role in sustaining currency stability moving forward.

Why Expectations Management Matters

Market expectations directly influence currency stability through several channels. When businesses and investors expect currency depreciation, they often accelerate dollar purchases. This creates self-fulfilling pressure on the cedi. The Bank of Ghana has observed this pattern during previous volatility episodes. Clear communication from the central bank helps align market expectations with economic fundamentals. Ghana's external position has strengthened through several key developments. The country secured a $3 billion Extended Credit Facility from the International Monetary Fund in 2023. Ghana also completed its domestic debt exchange program in 2024. These measures helped restore fiscal discipline and rebuild international reserves.

Ghana's Current Economic Position

Ghana's economic indicators show mixed signals as of early 2025. The country's gross international reserves stood at $5.2 billion in January 2025, according to Bank of Ghana data. This represents approximately 2.8 months of import cover. Ghana's inflation rate declined to 15.2% in December 2024, down from 23.2% a year earlier. The government projects economic growth of 2.8% for 2025. The cedi has depreciated by approximately 8% against the US dollar since January 2025. This compares favorably to the 30% depreciation experienced during the same period in 2022. The Ghana Revenue Authority collected GH₵150 billion in taxes during 2024, exceeding its target by 4%.

What Businesses Should Watch

Import-dependent companies should monitor several key indicators. The Bank of Ghana's foreign exchange auctions provide insight into dollar availability. The central bank conducts these auctions through the Ghana Interbank Foreign Exchange Market. Businesses should track Ghana's monthly trade balance data from the Ghana Statistical Service. The country recorded a trade surplus of $2.1 billion for the first eleven months of 2024. Companies should also watch cocoa export receipts, as cocoa remains Ghana's second-largest foreign exchange earner. Ghana produced 850,000 metric tons of cocoa during the 2023-2024 season. Gold exports generated $6.8 billion in 2024, according to the Bank of Ghana. The mining sector contributes approximately 8% to Ghana's GDP.

Policy Tools for Stability

The Bank of Ghana employs multiple tools to maintain currency stability. The central bank conducts regular foreign exchange interventions through commercial banks. These interventions aim to smooth volatility rather than defend specific exchange rate levels. The Bank of Ghana maintains a monetary policy rate of 29%, unchanged since January 2024. This rate influences domestic interest rates and capital flows. The central bank requires commercial banks to maintain specific capital adequacy ratios. These ratios ensure the banking sector can withstand economic shocks. The Ghanaian government continues its fiscal consolidation program under IMF supervision. This program includes reducing the budget deficit to 5% of GDP by 2025.

Regional Context and Comparisons

Ghana's currency management approach differs from regional peers. Nigeria's central bank has implemented multiple foreign exchange reforms since 2023. The Central Bank of Nigeria unified its exchange rate windows in June 2023. Kenya's shilling has faced persistent pressure despite central bank interventions. The Central Bank of Kenya raised its policy rate to 13% in December 2024. South Africa's rand remains vulnerable to global risk sentiment and domestic power shortages. The South African Reserve Bank maintains a flexible exchange rate regime. Ghana's focus on expectations management represents a distinct approach within the region.

Practical Implications for Companies

Multinational corporations operating in Ghana face specific challenges. Companies like MTN Ghana, Unilever Ghana, and Nestlé Ghana require regular foreign exchange for imports. These companies must navigate the Bank of Ghana's documentation requirements for dollar access. The Ghana Investment Promotion Centre reports foreign direct investment reached $2.5 billion in 2024. Export-oriented businesses like Blue Skies Holdings and Wienco Ghana benefit from cedi stability. These companies convert dollar earnings to cedis for local operations. The Ghana Free Zones Authority oversees 72 active companies in export processing zones. These companies exported goods worth $2.8 billion in 2024.

Looking Ahead

The Bank of Ghana faces several challenges in maintaining currency stability. Ghana must service approximately $750 million in external debt during 2025. The country's Eurobond payments resume in 2026 after the debt restructuring. Cocoa production faces threats from climate change and disease outbreaks. The Ghana Cocoa Board projects production of 800,000 metric tons for the 2024-2025 season. Gold prices remain volatile amid global economic uncertainty. The World Bank forecasts gold prices averaging $1,950 per ounce in 2025. The Bank of Ghana will continue its transparency efforts through regular monetary policy reports. These reports provide forward guidance to align market expectations with policy objectives.