President Nana Addo Dankwa Akufo-Addo has stated that for his government to keep the strength of the appreciating cedi, the Bank of Ghana, in the weeks ahead, “will continue with the purchases of forex from the mining and oil sectors to enhance liquidity supply to the market; continue with the single, unified forex forward auction and some modest targeted bilateral support to critical imports; and the implementation of the gold-for-oil swap transaction, which will significantly remove forex pressures on the cedi”.

According to him, the appreciation of the cedi against all major trading currencies is a result of deliberate policy interventions introduced by the government over the last few months.

According to President Akufo-Addo, “the strengthening of the cedi has not happened by chance, but through the implementation of deliberate policies by government, in collaboration with the Bank of Ghana.”

These measures, he said, include “cedi liquidity tightening measures, resulting in the offloading of forex, as a store of value, by speculators; the improvement of forex flows from remittances and the mining sector; and the reaching of a staff-level agreement with the IMF for a US$3 billion package.”

The President made this known on Sunday, 18 December 2022, when he delivered an address at the centenary celebration of the Ga Presbytery of the Presbyterian Church of Ghana, held at the Black Star Square, Accra.

Addressing the congregation, which included the Moderator of the Presbyterian Church of Ghana, Rev. Prof. Joseph Obiri Yeboah Mante, he stated that with appropriate policy, determination and hard work on the part of the government, things are beginning to turn around.

While acknowledging that the country was by no means “out of the woods yet”, he assured that the government will continue to work hard to maintain and sustain the gains made.

The cedi keeps making significant gains in value against the dollar and other currencies of international trade right after the International Monetary Fund and the government of Ghana announced a staff-level agreement for a US$3-billion extended credit facility for the gold-producing West African country whose economy has been on a downward spin since the beginning of the year.

The cedi fell by more than 54% against the dollar this year.

Some few weeks ago, a dollar hovered around ¢15.

However, it started rallying in the lead-up to a joint announcement by the government of Ghana and the IMF on Tuesday, 13 December 2022 that a staff-level agreement had been reached for a three-year IMF-supported programme for Ghana.

According to the Bank of Ghana, the dollar is currently selling at ¢8.0055 from Thursday’s ¢9.3047 and Wednesday’s ¢10.4052 and being bought at ¢7.9975 from Thursday’s ¢9.2954 and Wednesday’s ¢10.3948.

Within a matter of two weeks, the cedi became the best-performing currency in the world after being the worst performer for a few months.

3-year, US$3-billlion IMF-supported deal

An International Monetary Fund (IMF) team led by Mr Stéphane Roudet, Mission Chief for Ghana, visited Accra during December 1 – 13, 2022, to discuss with the Ghanaian authorities the Fund’s support for their policy and reform plans.

At the end of the mission, Mr Roudet issued the following statement: “I am pleased to announce that the IMF team reached a staff-level agreement with the Ghanaian authorities on a three-year programme supported by an arrangement under the Extended Credit Facility (ECF) in the amount of SDR 2.242 billion or about US$3 billion”.

“The economic programme aims to restore macroeconomic stability and debt sustainability while laying the foundation for stronger and more inclusive growth. The staff-level agreement is subject to IMF Management and Executive Board approval and receipt of the necessary financing assurances by Ghana’s partners and creditors”, Mr Roudet said.

“The Ghanaian authorities have committed to a wide-ranging economic reform programme, which builds on the government’s Post-COVID-19 Programme for Economic Growth (PC-PEG) and tackles the deep challenges facing the country”, he added.

He said: “Key reforms aim to ensure the sustainability of public finances while protecting the vulnerable. The fiscal strategy relies on frontloaded measures to increase domestic resource mobilisation and streamline expenditure. In addition, the authorities have committed to strengthening social safety nets, including reinforcing the existing targeted cash-transfer program for vulnerable households and improving the coverage and efficiency of social spending”.

Additionally, he noted: “Structural reforms will be introduced to underpin the fiscal strategy and ensure a durable consolidation”.

“These include developing a medium-term plan to generate additional revenue and advancing reforms to bolster tax compliance. This will help create space for growth-enhancing measures and social spending”.

Efforts, he mentioned, “will also be made to strengthen public expenditure commitment controls, improve fiscal transparency (including the reporting and monitoring of arrears), improve the management of public enterprises, and tackle structural challenges in the energy and cocoa sectors. The authorities are also committed to further bolstering governance and accountability”.

To support the objective of restoring public debt sustainability, Mr Roudet said “the authorities have announced a comprehensive debt restructuring. Sufficient assurances and progress on this front will be needed before the proposed Fund-supported programme can be presented to the IMF Executive Board for approval”.

He stressed: “Reducing inflation, enhancing resilience to external shocks, and improving market confidence are also important programme priorities”, noting: “Accordingly, the Bank of Ghana will continue to strengthen its monetary policy framework and promote exchange rate flexibility to rebuild external buffers”.

“As part of the authorities’ debt strategy, a domestic debt exchange has been launched. The authorities are committed to taking the necessary mitigation measures to ensure financial sector stability is preserved”, the Bretton Wood institute delegation head pointed out.

He said the IMF staff held meetings with Vice President Mahamudu Bawumia, Finance Minister Ken Ofori-Atta, and Bank of Ghana Governor Ernest Addison, and their teams, as well as representatives from various government agencies.

The IMF team has also continued to engage with other stakeholders.

The staff expressed their gratitude to the Ghanaian authorities, Parliament’s Finance Committee and all the private sector, trade union, and civil society representatives for their open and constructive engagement over the past few months.

For his part, Mr Ofori-Atta told journalists that the deal, once approved by the IMF Board, will help Ghana restore economic stability, tackle inflation and strengthen the Ghana cedi, Finance Minister Ken Ofori-Atta has said.

Addressing Journalists at a press conference on Tuesday, 13 December 2022, following the staff-level agreement, Mr Ofori-Atta said: “Truly, the eventual conclusion of the programme will assist us in our efforts to restore stability, tackle inflation, and strengthen our currency.”

“That is why the various ingredients of the programme should be supported by all Ghanaians and all stakeholders.”