Exchange Rate Control Undermining Port Revenue- INSTERP
By Praisebell Rosemond Larbi
The Executive Director of the Institute for Energy Policies and Research (INSTEPR), Mr. Kwadwo N. Poku, has cautioned that Ghana’s deliberate attempt to stabilize the cedi through artificial exchange rate controls is now undermining revenue mobilization, particularly at the country’s ports.
According to him, the Bank of Ghana (BoG) and the Ministry of Finance are spending vast sums of foreign reserves to maintain the cedi at a level that does not accurately reflect prevailing market forces. He warned that this approach, though intended to provide short-term relief from inflation and price volatility, is creating long-term fiscal distortions and threatening government revenue targets.
“Since the foreign exchange value has been made low, it is affecting the Ghana Revenue Authority’s receivables from the ports. Import duties are being calculated at an artificially suppressed exchange rate, which means the state is losing significant revenue that would otherwise have accrued if the rate reflected market realities,” Mr. Poku explained.
He argued that the cedi’s true value against the dollar currently lies between GH¢12.40 and GH¢12.50, far above the prevailing benchmark being used for customs assessments. Maintaining it below that level, he noted, risks widening fiscal imbalances and deepening what he described as a “$21 billion hole in the national budget.”
“It has never been the case where the Bank of Ghana is doing the semantics they are doing now, forcefully keeping the dollar at a certain price when, in reality, we know they are expending enormous resources to defend it,” he remarked.
Mr. Poku acknowledged that the central bank’s intervention has provided temporary relief in fuel pricing, with petrol and diesel recording marginal declines this week. However, he cautioned that such benefits are unsustainable if the exchange rate continues to be managed outside market principles.
He further urged the government to adopt a more transparent and market-driven approach to exchange rate management, emphasizing that any continued manipulation could distort fiscal planning, reduce revenue inflows, and weaken investor confidence.
“The country needs to confront these realities rather than masking the true value of the cedi. If we are serious about restoring fiscal discipline and investor trust, then we must allow the market to determine the exchange rate while focusing on improving productivity and export earnings,” he stressed.
Mr. Poku’s comments add to growing concerns among economists and policy analysts that Ghana’s current exchange rate policy designed to curb inflation and stabilize prices, may be inflicting deeper structural damage on the economy, particularly in the area of trade and customs revenue mobilization.
