Cedi gains artificial without structural reforms – Prof. Bokpin warns BoG over lack of transparency
Economist and Professor of Finance at the University of Ghana Business School, Godfred Bokpin, has stated that the recent appreciation of the Ghana cedi is not indicative of a genuine economic recovery but rather the result of behind-the-scenes interventions by the Bank of Ghana (BoG).
In a radio interview on Joy FM on Thursday, 5 June 2025, Prof. Bokpin claimed that the central bank had been managing the exchange rate within a specific band—between GH¢10 and GH¢12 to the US dollar—without formally communicating this to the public.
He cautioned that the absence of transparent communication could fuel unrealistic expectations about the strength of the local currency.
“There was an intervention to cause the strengthening. This wasn’t stability, it was a disruption,” he said.
“We knew over a month ago that the cedi would likely stabilise within that range, but it was not communicated to the market.”
While acknowledging that such interventions may be necessary at times, Prof. Bokpin argued that they must be executed with transparency and predictability to enable businesses and households to make informed decisions.
He warned that withholding critical information on monetary policy weakens confidence in the market, especially in an already volatile economic environment.
“The central bank cannot simply leave the cedi to market forces. But when it chooses to intervene, it must also choose transparency,” he asserted.
He added that sudden and unexplained movements in the value of the cedi—whether upward or downward—create planning difficulties, particularly for importers and exporters who rely on a stable exchange rate to manage costs and contracts.
Prof. Bokpin further stressed that despite the recent strengthening of the cedi, underlying economic fundamentals remain weak. Lending rates remain high, job creation is sluggish, and infrastructure gaps persist.
“Sharp appreciations that are not backed by productivity or structural transformation tend to reverse in months or a year,” he warned. “We must be cautious not to celebrate too early.”
He noted that the policy rate remains at 28 per cent, with credit to the private sector largely characterised by high-cost, short-term loans. According to him, this disincentivises investment in manufacturing and productive ventures. Meanwhile, employment growth is concentrated in informal trade and capital-intensive sectors such as mining, which offer limited prospects for broad-based, sustainable development.
Prof. Bokpin urged the Bank of Ghana to align its monetary interventions with clear public communication and called on the government to strengthen the real economy through targeted reforms.
“Transformation starts with long-term macroeconomic stability, but that must rest on real sector reforms, infrastructure, power, lending, and decent jobs,” he said. “Without those, the currency gains will not hold.”
He also warned that businesses may take advantage of recent currency fluctuations to declare losses during tax filing, potentially reducing domestic revenue and undermining the 2025 national budget.
While conceding that short-term exchange rate management has a role to play, Prof. Bokpin maintained that credibility, transparency, and long-term planning are essential to Ghana’s economic recovery.
“We need the Bank of Ghana to manage the market, yes, but we also need them to do it openly. You don’t build confidence in the economy with silence,” he concluded.