World Bank backs IMF warning on forex market interventions
The World Bank has added its voice to calls for Ghana to exercise restraint in the management of its foreign exchange market, warning that excessive interventions could undermine the country’s long-term economic prospects.
The caution, contained in the Bank’s 2025 Ghana Policy Notes, mirrors earlier concerns raised by the International Monetary Fund (IMF), which in July warned that the Bank of Ghana’s footprint on the forex market was becoming disproportionately large.
According to the IMF, the use of scarce reserves to artificially defend the cedi carries severe risks for growth, debt sustainability and investor confidence.
In its assessment, the World Bank acknowledged that limited interventions can temporarily stabilise prices and reassure consumers. However, it stressed that such measures ultimately weaken competitiveness, choke investment and delay the structural reforms Ghana urgently needs.
“The most pressing priority would be to establish enduring credibility by strengthening fiscal and growth fundamentals rather than precipitously re-entering the Eurobond market or substantially intervening in the foreign exchange market to bolster the value of the Ghanaian cedi,” the report stated.
It added that while propping up the cedi may offer “immediate relief,” the longer-term outcome is “detrimental to competitiveness, hinders long-term growth and undermines structural transformation.”
The Bank also pointed to Ghana’s experience following the Highly Indebted Poor Countries (HIPC) debt relief initiative in the early 2000s, when temporary stability quickly gave way to fresh cycles of borrowing, currency pressure and fiscal crises due to the absence of strong fiscal discipline.
To avoid repeating those mistakes, the World Bank recommends that Ghana focus on building consistent primary fiscal surpluses before debt servicing. By sending a clear signal of fiscal responsibility, the government would reassure markets, boost private sector confidence and demonstrate that public debt is firmly on a sustainable path.
The World Bank therefore joins the IMF in urging Ghana to pursue fiscal consolidation, broaden revenue mobilisation and strengthen growth fundamentals as the sustainable path to maintaining a stable cedi.
