By Daniel Bampoe
The John Mahama led-government may soon find itself in a precarious financial situation following the unexpected surge in the value of the Ghana cedi against the US dollar—an economic trend that has raised eyebrows among experts and policymakers alike.
Over the past few weeks, the cedi has appreciated by more than 24% against the greenback, prompting celebrations among some ruling party loyalists but also sparking deep concerns about long-term economic stability and fiscal planning.
While a stronger cedi might superficially suggest good economic health, the broader implications paint a far more complicated picture.
Former New Patriotic Party (NPP) presidential aspirant and energy expert, Kwadwo Poku, in a detailed commentary, warned that the current trend could derail the government’s economic blueprint and undermine the country’s fiscal position.
At the heart of the concern is the 2025 national budget, which was constructed on the assumption of an exchange rate of GH₵15.40 to the US dollar. With the cedi now trading around GH₵11—or possibly lower—the government effectively loses GH₵4.40 or more on every dollar earned from key exports like gold, cocoa, and oil.
This discrepancy could translate into billions of cedis in lost revenue, money that would have otherwise gone into critical development projects such as road construction, schools, and health infrastructure.
This development is particularly troubling given that the cost of raw materials such as cement and iron rods remains high.
As Poku notes, the government may now need to double export volumes just to afford the same infrastructure developments it managed last year.
The appreciation is also expected to impact import duties—a major revenue stream for the Ghana Revenue Authority (GRA).
With lower import costs due to the stronger cedi, port duties shrink, potentially jeopardizing the GRA’s ability to meet its revenue targets.
Additionally, this situation could deter foreign direct investment, as the rapid currency fluctuations introduce uncertainty into the business environment.
Despite the government’s supporters hailing the cedi’s rise as a fulfillment of President Mahama’s purported pledge to bring the dollar rate down to GH₵9, economists argue that the benefits to ordinary citizens are negligible.
Historically, traders and businesses adjust their pricing based on margins rather than exchange rates.
When the dollar weakens, instead of passing savings onto consumers, many businesses simply widen their profit margins to recover previous losses sustained when the dollar was stronger.
This phenomenon is particularly evident in the petroleum sector. Bulk distribution companies (BDCs) have reaped windfalls over the past month as import costs declined, yet retail prices for petrol and diesel have only marginally dropped—if at all—leaving the average consumer unimpressed by the currency appreciation.
The underlying cause of the cedi’s sudden strength remains unclear.
Poku raises the possibility of panic selling by individuals or institutions previously holding USD as a hedge, rather than any sustained impact from government policy.
If so, this artificial buoyancy could quickly deflate, exacerbating economic instability.
