Frequent damaged currency replacement cost falls on taxpayers – Analyst

Economic analyst Emmanuel Boateng has publicly supported the Bank of Ghana’s recent call for improved handling of the nation’s currency, the cedi, to reduce the financial burden associated with replacing damaged notes.

Speaking on Zed’s Business Breakfast programme, Mr Boateng said the costs incurred by frequent currency replacement ultimately fall on Ghanaian taxpayers, making it imperative for the public to follow the central bank’s guidance.

He explained that the Bank of Ghana’s warning comes amid rising expenses linked to currency replacement, which have increasingly strained the Currency Management Department.

“There is a confluence of operational and symbolic concerns. Damaged currency imposes a double burden on the government: a direct financial cost from premature replacement and a reputational cost affecting national economic credibility,” Mr Boateng stated.

The economic analyst noted that deteriorated currency quality can undermine public confidence in monetary institutions, making the central bank’s caution timely and necessary. He further elaborated on the broader economic consequences of mishandling currency.

“Damaged notes disrupt daily transactions, waste productive time, and the volume of withdrawn currency can reduce money supply, potentially triggering inflation as fewer notes chase more goods,” he said.

Enumerating the impact beyond macroeconomic dynamics, the analyst added that replacing damaged currency diverts resources away from developmental projects, thereby increasing financial pressure on ordinary citizens.

“At the microeconomic level, merchants may reject damaged notes, and the artificial reduction in money supply can cause local liquidity surges that fuel inflation,” he emphasised.

Mr Boateng further noted that the cost of replacing currency is ultimately borne by citizens, which is why careful handling is essential.