Sustaining forex requires fiscal discipline, reforms — Expert

Sustaining foreign exchange (forex) gains will require comprehensive structural reforms, ongoing fiscal discipline and progressive monetary policies rather than short-fixes, the Head of Corporate and Investment Banking (CIB) at Stanbic Bank, Musah Abdallah, has said.

He explained that while the recent appreciation of the cedi was positive, it could pose challenges to Ghana’s export competitiveness if exchange rates become misaligned.

Therefore, he said the government must channel the forex gains into tangible development outcomes and ensure that businesses thrive in the new environment.

"Sustaining these forex gains will require more than short-term fixes. It will demand deep structural reforms, ongoing fiscal discipline, complementary and progressive monetary policy,” Mr Abdallah added.
 

Breakfast meeting

Mr Abdallah was speaking at the Graphic Business/Stanbic Bank Breakfast Meeting in Accra last Tuesday on the theme: “Sustaining forex gains: Business and economic impact.”

The quarterly meeting brought together stakeholders, including industry leaders, financial experts, policymakers and academics who discussed the critical issue of sustaining forex gains and their impact on the country's economic development.

The event, which was the second of four for the year, was chaired by the Governor of the Bank of Ghana, Dr Johnson Asiama.
 

Investment 

In his keynote address, Dr Asiama noted that strengthening the local economy required more than stabilising the currency.

He said despite a 42 per cent year-on-year appreciation of the cedi in 2025, Ghana remained vulnerable due to limited reinvestment of export revenues.

The Governor explained that many exporters reportedly held their earnings offshore, limiting the productive use of foreign exchange within the country, a behaviour that weakened the financial ecosystem and undermined long-term growth prospects.

To address this challenge, Dr Asiama proposed tax incentives, preferential credit access, and public procurement privileges for exporters who reinvest locally. 
 

Reforms 

An Associate Professor of Economics at the University of Ghana Business School, Prof. Agyapomaa Gyeke-Dako, commended the central bank’s efforts at monetary stabilisation.

She, however, emphasised the need for coordinated action to address inflation and supply chain bottlenecks that put pressure on the currency.

She advocated reforms aimed at improving domestic infrastructure and addressing inefficiencies in the agricultural value chain, particularly the disparity between farm gate prices and market prices.

“If we are serious about inflation control, we must deal with the power that market queens wield and reintroduce competition mechanisms, such as state-led food distribution companies, to ensure affordable prices in urban markets,” Prof. Gyeke-Dako said.

She further highlighted the need to change the way importers accessed foreign exchange, saying that the overly stringent bank procedures pushed many traders to the black market, fuelling unofficial forex trading and tax evasion.

“There must be a balance between enforcing tax compliance and ensuring that genuine importers are not burdened with unrealistic documentation demands,” Prof. Gyeke-Dako said.

She further said that “if we want to diversify our economy, we must support food crop farmers in the same way we support cocoa farmers”.