Cedi’s Medium-Term Stability to Depend on Reserve Build-Up, Post-IMF Fiscal Discipline – IC Research
By Praisebell Rosemond Larbi
Ghana’s medium-term exchange rate stability will largely depend on the country’s ability to sustain foreign reserves and maintain strict fiscal discipline after the completion of the International Monetary Fund (IMF) program, a new analysis by financial market research firm IC Research has indicated. The outlook follows the Bank of Ghana’s approval of a new Foreign Exchange (FX) Operations Framework, aimed at enhancing transparency, restoring investor confidence, and strengthening macroeconomic stability.
IC Research described the framework as a significant policy shift capable of anchoring market expectations in much the same way that the inflation targeting regime has done since its introduction in 2007. According to the firm, the Bank of Ghana’s more transparent and predictable operational guidelines should help reduce intraday volatility and provide clearer signals to both domestic and foreign market participants.
“We expect the predictable, transparent and market-neutral approach to FX operations by the Bank of Ghana to anchor market sentiment and reduce intraday volatility, similar to the transparency-induced benefits of inflation targeting,” the report stated. IC Research forecasts the Ghana cedi to remain relatively stable in the near term, maintaining an exchange rate below GH¢12.0 to the US dollar through late 2026, barring unexpected shocks.
However, it noted that the medium-term durability of this stability will depend heavily on the success of Ghana’s reserve-accumulation strategies, especially in the context of growing external debt service obligations beginning in 2026. The report cautioned that inflows from the gold-for-reserves program, cocoa and mineral export surrenders, and other sources must remain consistent for the framework to achieve its intended objectives.
The new FX operations model codifies the Central Bank’s ability to intervene in the market, but under a more disciplined, rules-based structure referred to as “discretion under constraint.” This approach will allow the Bank of Ghana to respond to market pressures while avoiding the excessive, ad-hoc interventions that previously weakened reserves and distorted market pricing.
Under the framework, the Bank will pursue three critical policy targets:
1. Reserve Build-Up: Strengthening Ghana’s buffer against external shocks by improving net international reserves.
2. Volatility Smoothening: Reducing sharp short-term fluctuations without compromising exchange rate flexibility.
3. Market-Neutral Intermediation: Playing the role of a disciplined market participant instead of a price-setter, thereby improving transparency and reducing uncertainty.
IC Research argues that these measures, collectively, represent a more credible system of FX management ahead of Ghana’s exit from the IMF program in 2026. “We believe this is akin to the Inflation Targeting Framework, which the monetary authorities have relied upon since 2007 to reduce swings in inflation and anchor expectations,” the report added.
The firm further emphasised that policy credibility will become even more critical beyond 2026, when investors will closely scrutinise Ghana’s fiscal and monetary commitments to determine whether the current stability is sustainable. Market confidence, it said, will largely influence exchange rate outcomes, with indications already showing that disciplined reforms are essential to maintaining a stable cedi in the medium term.
In conclusion, IC Research noted that the Bank of Ghana’s new operations framework marks a shift from reactive interventions to a more systematic and rules-driven model. This, it said, strengthens institutional credibility, improves transparency, and places Ghana on a more sustainable path in managing foreign exchange market pressures.
