Cedi Stability Key to Ghana’s Inflation Turnaround – IMF
By Praisebell Rosemond Larbi
The International Monetary Fund (IMF) has attributed Ghana’s remarkable decline in inflation to the stability of the cedi throughout 2025, marking a decisive turnaround from the steep depreciation that fueled price pressures across the economy last year.
According to the IMF, the cedi’s sustained appreciation up by 37 percent against the US dollar as of October 17, 2025, has been central to restoring macroeconomic balance and rebuilding market confidence. The local currency’s strong performance, underpinned by disciplined fiscal management and prudent monetary policy, has helped anchor inflation expectations and strengthen investor sentiment.
The IMF observed that the exchange rate’s resilience has significantly moderated imported inflation, helping overall inflation fall sharply from about 24 percent in 2024 to 9.4 percent in September 2025, the lowest level in four years.
“The contrast between last year’s rapid currency depreciation and this year’s appreciation clearly shows how exchange rate management has shaped the inflation path,” the Fund stated.
IMF Resident Representative to Ghana, Dr. Adrian Alter, explained that across Africa, exchange rate movements remain one of the strongest determinants of inflation trends, and Ghana’s case offers a striking example of that relationship.
“In general, what we have seen in Africa is that exchange rate plays an important role in determining inflation. In 2022, many countries experienced depreciation of between 50 and 100 percent per year, translating into about 20 percent inflation purely from imported goods,” Dr. Alter noted.
He said Ghana’s experience in 2024 reflected this pattern, when the cedi’s sharp depreciation combined with drought-driven food shortages to trigger surging consumer prices.
“The other component was the exchange rate. Exchange rate was depreciating last year, while this year it is appreciating,” Dr. Alter emphasized, adding that the turnaround in 2025 has been vital in stabilizing prices.
Already, the World Bank has ranked the Ghana cedi as the best-performing currency in Sub-Saharan Africa during the first eight months of 2025. The institution credited this success to sustained fiscal restraint, improved foreign exchange management, and robust external support under Ghana’s IMF program. The IMF noted that the currency’s current stability, reinforced by the Bank of Ghana’s firm policy stance, has helped anchor inflation expectations and fostered a recovery in real incomes and business confidence.
Dr. Alter concluded that maintaining exchange rate stability and fiscal discipline would be essential to consolidating the gains achieved in 2025 and ensuring that inflation remains within the single-digit target band over the medium term.
