Cedi Appreciation will Reduce Government Debt – Economic Analyst
Story by: Rebecca Okine
Economic analyst at Zed, Emmanuel Boateng, says the recent appreciation of the Ghanaian cedi will help ease the country’s debt burden, particularly debt denominated in foreign currencies such as the US dollar.
Speaking during the Business Breakfast on Zed 101.9FM yesterday, Mr. Boateng explained that as the value of the cedi strengthens, the relative cost of servicing dollar-denominated debt decreases.
“As the cedi appreciates, the value of our debt falls especially the debt denominated in dollars,” he said. “We were all here when Ghana owed a certain amount in dollars, and as the cedi depreciated, the volume of our debt in cedi terms increased. Now, with the cedi appreciating, the reverse is happening.”
As of May 6, interbank FX rates from the Bank of Ghana revealed that the Ghanaian cedi was trading at GH₵ 13.45 to the US dollar, a notable improvement from earlier depreciation trends that drew widespread criticism.
Mr. Boateng noted several factors driving this upward performance.
“The US dollar itself has not been performing well in recent times due to various global developments,” he said. “Tariffs and broader economic uncertainties under President Donald Trump’s administration have made the dollar less attractive globally.”
Domestically, Mr. Boateng attributed part of the cedi’s strength to improved foreign exchange reserves and effective policy measures. He revealed that Ghana’s international reserves had risen to approximately $9.3 billion by the end of February 2025, providing a significant buffer against external shocks.
“We’re also benefiting from inflows under the IMF programme and support from the World Bank,” he said. “These, combined with monetary policy tools like interest rate adjustments and targeted interventions in the forex market by the Bank of Ghana, have helped to stabilize the cedi.”
While acknowledging the positives, Mr. Boateng was quick to point out that the appreciation may not be welcomed by everyone particularly investors and businesses who trade in US dollars.
“If you invested in dollars at a rate of 15 cedis to the dollar and now it’s 14, your investment value in cedi terms has dropped,” he explained. “Depending on your position, this can result in a loss.”
He also noted that businesses that price their goods in dollars but operate locally may see their profit margins shrink due to the shift in exchange rates. Despite this, Mr. Boateng urged calm, especially among dollar investors, and emphasized the importance of continued fiscal discipline by government.
