Festive Remittances to Lift Consumption, Bolster Reserves
By Praisebell Rosemond Larbi
As remittance inflows are expected to peak in the weeks ahead of the Christmas and New Year festivities, analysts say sustained reforms and stronger capture mechanisms could help cushion the economy beyond the holiday season, while also supporting exchange-rate stability, trade financing and broader macroeconomic resilience.
Official data already point to solid inflows in 2025, reinforcing the growing importance of remittances as a key source of foreign exchange for the economy. According to figures available as at September 2025, inward private transfers had reached US$5.98 billion, underlining the critical role of the Ghanaian diaspora in supporting households and the wider economy.
Historically, remittance inflows tend to rise sharply during the festive period as Ghanaians abroad send funds home to support families, cover school fees, settle utility bills and finance Christmas-related spending. This seasonal boost is expected to lift household consumption in the final quarter of the year, providing short-term support to retail trade, transport, hospitality and other consumer-facing sectors.
Banking consultant Dr. Richmond Atuahene notes that while a significant portion of remittances is directed toward consumption, their overall impact on economic activity remains substantial.
“The more inflow of this is supposed to support the economy, but unfortunately most of them are for consumption. Most of these remittances come in to support the local economy,” he said.
Beyond their immediate consumption effect, Dr. Atuahene stressed that remittances play a critical stabilising role in the broader financial system. According to him, sustained inflows help strengthen Ghana’s foreign exchange reserves, improve liquidity in the banking sector and enhance the capacity of banks to finance imports and trade-related activities.
“However, the next leg of it is that it beefs up our reserves, it gives the banks more foreign exchange to support the import business and the trade business in Ghana,” he explained.
This function has become increasingly important at a time when Ghana continues efforts to stabilise the cedi, manage external imbalances and rebuild confidence in the financial system. Strong remittance inflows help ease pressure on the foreign exchange market, reduce volatility and complement other sources of external financing.
Dr. Atuahene also commended the Bank of Ghana for tightening oversight within the remittance space, noting that improved monitoring and regulation have reduced leakages that previously limited the full economic benefit of inflows.
“There used to be leakages but now the Bank of Ghana has been able to strengthen it and most of their remittances have been captured so that it will support the economy,” he noted.
Analysts argue that further improvements in remittance capture, formal transfer channels and incentives to channel part of these inflows into savings and productive investments could amplify their long-term impact. While consumption provides an important short-term stimulus, directing a portion of remittances into housing, small businesses and financial instruments could help deepen domestic capital formation.
With festive inflows set to rise in the coming weeks, economists believe that sustained reforms, stronger oversight and innovative financial products could ensure that remittances continue to support economic stability well beyond the holiday season, strengthening reserves, supporting trade and reinforcing Ghana’s recovery path.
