Ghana's central bank went on a $1.4 billion spending spree in the first quarter of 2025, frantically propping up the cedi in what the World Bank and IMF are now calling a dangerous game. That figure already exceeds everything the Bank of Ghana spent on currency defense during all of 2023. The message from Washington is clear: Stop it.
Ghana burned through $1.4 billion defending the cedi in just three months—more than all of 2023. Washington's verdict: dangerous and unsustainable.
Both institutions warn this heavy-handed currency defense threatens Ghana's long-term competitiveness and growth. Sure, artificially supporting the cedi creates temporary market calm. But it undermines economic transformation and resilience. The World Bank says these interventions could trigger significant contraction in global trade, hammering Ghana's export competitiveness. Not exactly a winning strategy.
Here's the irony. The cedi recently ranked as the top-performing currency globally. Businesses enjoyed reduced costs. Households felt relief at the markets. But the IMF alleges direct currency injections are artificially holding everything together. It's economic theater, and the World Bank isn't buying tickets.
The Bank of Ghana seems to have gotten the memo, at least partially. Forex forward sales dropped 53.6% to $822.8 million in July 2025. But the damage might already be done. Currency interventions can lead to unpredictable import costs, sudden reserve depletion, price spikes, and lost household purchasing power.
What Ghana really needs, according to the World Bank, is credible fiscal policy instead of currency gimmicks. Achieving primary fiscal surpluses before debt payments would signal actual sustainability. Ghana's history of fiscal indiscipline led to repeated boom-bust cycles after HIPC debt relief. The pattern is exhausting.
Meanwhile, the banking sector sits on shaky ground. The World Bank highlights urgent recapitalization needs and thorough asset quality reviews to tackle high non-performing loans. Strengthening bank balance sheets matters as much as any currency intervention.
The IMF's messaging adds confusion. They cautioned against defending the currency while simultaneously warning that interest rates shouldn't drop too soon. Understanding how interest rate decisions shape currency values would clarify why premature rate cuts could undo any stability gains from interventions. Ghana operates under a $3 billion extended credit facility, and the policy constraints keep piling up.
The World Bank's advice boils down to this: hold off on premature re-entry into international bond markets and maintain fiscal discipline. Like other African currencies in global FX markets, the cedi's true value emerges from underlying economic fundamentals rather than temporary intervention measures. The Bank of Ghana's regulatory functions extend beyond currency interventions to include supervising financial institutions and implementing monetary policy tools designed to maintain economic stability. Everything else is just buying time.
