IMF credits Ghana’s inflation drop to cedi’s strong recovery, fiscal discipline

IMF Resident Representative to Ghana, Dr. Adrian Alter

The International Monetary Fund (IMF) has credited Ghana’s sharp fall in inflation to the exceptional stability and appreciation of the cedi in 2025, following a turbulent period of steep depreciation that had worsened price pressures across the economy last year.

According to the Fund, the cedi’s 37 percent appreciation against the US dollar as of October 17, 2025, reflects renewed market confidence, improved foreign exchange management, and a tighter monetary stance by the Bank of Ghana.

This currency rebound, the IMF noted, has been central to Ghana’s progress in restoring price stability, with inflation plunging from 24 percent in 2024 to 9.4 percent in September 2025 — the lowest level in four years.

The IMF observed that the contrast between last year’s rapid depreciation and this year’s strong recovery underscores the crucial role of exchange rate management in shaping Ghana’s inflation trajectory.

In an interview on Channel One TV’s Point of View, the IMF Resident Representative to Ghana, Dr. Adrian Alter, explained that exchange rate movements remain a major determinant of inflation trends across Africa.

“In general, in Africa, what we have seen is that the exchange rate plays an important role in determining inflation,” Dr. Alter said. “When you have depreciation of about 100 percent, roughly 20 percent of that translates into inflation through imported goods. Ghana experienced this effect in 2024 when the cedi weakened sharply, compounded by drought-related food shortages.”

He noted that the trend has now reversed, with the cedi’s appreciation in 2025 easing price pressures and supporting economic stability. “Exchange rate was depreciating last year while this year it is appreciating,” he stressed.

The World Bank has already recognised the cedi as Sub-Saharan Africa’s best-performing currency in the first eight months of 2025 — a milestone reflecting the combined impact of fiscal prudence, monetary tightening, and ongoing structural reforms.

Dr. Alter added that Ghana’s improved fiscal discipline and consistent monetary policy have anchored inflation expectations, boosted investor confidence, and laid a strong foundation for sustained macroeconomic recovery.

“The cedi’s stability has been a critical anchor for Ghana’s economic turnaround,” he affirmed, “and maintaining this trajectory will be key to securing long-term growth and price stability.”