World Bank urges BoG to ease foreign exchange controls
By Praisebell Rosemond Larbi
The World Bank has cautioned the Bank of Ghana (BoG) to limit its Foreign Exchange (FX) market interventions, warning that excessive action could distort market balance, drain reserves, and weaken economic resilience.
The advice was contained in the latest Ghana Economic Update report, launched in Accra on Thursday, 14 August 2025.
The report emphasised that while targeted interventions can help smooth short-term volatility, heavy-handed market control risks undermining investor confidence and delaying the natural adjustment of the cedi to global and domestic conditions.
According to the Bank, allowing market forces to play a greater role in determining the exchange rate would enhance transparency, encourage better risk management by businesses, and strengthen Ghana’s long-term economic stability.
In addition to exchange rate policy, the report placed significant focus on the state of Ghana’s banking sector. It called for the swift completion of the recapitalisation of all financial institutions in line with the government’s Financial Sector Strengthening Strategy.
The recapitalisation drive, initiated after the 2017 to 2019 sector clean-up, is aimed at ensuring that banks and specialised deposit-taking institutions have adequate capital buffers to withstand economic shocks.
The World Bank also recommended a comprehensive asset quality review to address the persistently high levels of non-performing loans (NPLs) in the system.
The Bank advised that each institution be given clear, actionable plans to improve loan recovery, restructure bad debts, and strengthen credit risk assessment processes.
The report’s recommendations come as Ghana pushes forward with reforms under its three-year IMF-supported Post-COVID-19 Programme for Economic Growth (PC-PEG).
The programme aims to restore macroeconomic stability, reduce the fiscal deficit, and lay the groundwork for sustainable growth.
Ghana’s central bank has been actively supporting the cedi in recent months through regular FX auctions and targeted market interventions.
While these measures have helped stabilise the currency, the World Bank warned that sustained reliance on them could erode reserves and create misalignments.
It further underscored that policy coordination between fiscal and monetary authorities will be critical, especially as Ghana navigates a challenging external environment, tight global financing conditions, and ongoing domestic reforms.
The Bank concluded that transparent exchange rate management and a resilient banking sector are essential pillars for building investor confidence, boosting private sector growth, and safeguarding Ghana’s economic recovery.
