Safeguarding the Ghanaian Cedi in the Post-Election Era: A Strategic Policy Outlook

Dr. Jabil Sayibu Financial Economist and Policy Analyst

This article explores policy strategies to sustain the Ghanaian cedi’s stability following the 2024 elections. It emphasizes the importance of fiscal discipline, IMF program compliance, credible monetary policy, foreign reserve strengthening, energy sector reform, and improved economic governance. With coordinated implementation, these measures can ensure macroeconomic stability and renewed investor confidence in Ghana’s economic direction under the new administration.

Ghana's December 2024 general elections marked a pivotal moment in the nation’s democratic and economic trajectory. The election of former President John Dramani Mahama and his running mate, Jane Naana Opoku-Agyemang, who became the country’s first female Vice President, signals both political change and potential shifts in policy direction. The National Democratic Congress (NDC) secured a strong mandate with 56.55% of the vote and a parliamentary majority, giving the new administration the leverage needed to implement economic reforms. As the dust settles, attention now turns to the post-election economic landscape, particularly the stability of the Ghanaian cedi, which has recently shown signs of resilience. This article outlines a comprehensive policy strategy to sustain and strengthen the cedi amidst evolving political and economic conditions.

1. Sustaining Fiscal Discipline and IMF Commitments

The cornerstone of cedi stability lies in Ghana’s adherence to fiscal prudence. The ongoing $3 billion Extended Credit Facility program with the International Monetary Fund (IMF) has been instrumental in restoring macroeconomic stability. The Mahama administration must remain committed to the IMF program by continuing fiscal consolidation efforts, avoiding off-budget expenditures, and ensuring timely completion of program reviews to unlock further disbursements. Transparent budget execution and reporting will be critical to maintaining donor and investor confidence.

2. Reinforcing Monetary Policy Credibility
The Bank of Ghana (BoG) must sustain its data-driven, inflation-targeting monetary policy framework. The recent decline in inflation presents an opportunity to anchor expectations and support the real value of the cedi. However, monetary easing should be approached cautiously to prevent triggering capital outflows. The BoG must continue to communicate policy intentions clearly and intervene in the foreign exchange market only to smooth volatility, not to target specific levels.

3. Enhancing Foreign Exchange Reserve Buffers

Strengthening the country’s foreign exchange reserves remains a key defense mechanism against external shocks. Ghana should leverage increased export receipts from gold, cocoa, and oil while diversifying its export base to reduce vulnerability. Programs such as the gold-for-oil and gold-for-reserves initiatives should be institutionalized and refined to reduce the structural demand for foreign exchange in critical sectors. Additionally, policies that streamline and incentivize diaspora remittance flows can bolster FX inflows.

4. Addressing Structural Rigidities, especially in the Energy Sector

The energy sector continues to pose a significant fiscal risk due to arrears, inefficiencies, and pricing distortions. Comprehensive energy sector reform is necessary to eliminate quasi-fiscal deficits and reduce FX pressures from fuel imports. This includes rationalizing subsidies, improving utility collections, renegotiating power purchase agreements, and investing in renewable energy. A financially viable energy sector will lessen the burden on public finances and the cedi.

5. Strengthening Economic Governance and Public Sector Efficiency

A stable macroeconomic environment requires strong institutions. The new administration must reinforce economic governance by promoting transparency, accountability, and adherence to the rule of law. Strengthening anti-corruption institutions and public procurement systems will enhance resource utilization and attract private sector investment. Additionally, improving public sector efficiency through digitization and results-based management will reduce waste and improve service delivery.

Conclusion: Anchoring Confidence in a New Era

Ghana stands at a critical crossroads. The post-election period offers both opportunities and challenges. By maintaining fiscal discipline, reinforcing monetary credibility, boosting foreign exchange reserves, implementing structural reforms, and enhancing governance, the new administration can safeguard the Ghanaian cedi and foster a resilient economic recovery. The cedi’s recent strength is not guaranteed but can be sustained with consistent, credible, and coordinated policy actions. In doing so, Ghana can build a more stable financial future in this new political era.