The Bank of Ghana (BoG) injected a staggering $1.4 billion into the foreign exchange (FX) market during the first quarter of 2025 in a bid to stabilize the Ghanaian cedi, the International Monetary Fund (IMF) has disclosed in its latest review of the country’s economic program.
The IMF report, published following its fourth review under Ghana’s $3 billion Extended Credit Facility (ECF), highlights the BoG’s increased presence in the FX market amid growing demand for foreign currency to meet critical payment obligations.
“The Bank of Ghana’s footprint in the FX market continued to increase significantly,” the report stated, noting that the $1.4 billion intervention in Q1 2025 was a sharp rise from previous periods.
Soaring FX Demand
The central bank’s aggressive dollar sales were largely driven by persistent external payment obligations, including:
Settlements to independent power producers (IPPs);
Payments for fuel imports, which the BoG estimates at nearly $400 million per month — totaling over $1.2 billion in Q1 alone;
Transactions involving the West African Gas Pipeline Company and other energy sector entities.
Stabilizing the Cedi
The intervention contributed to a remarkable appreciation of the cedi, which strengthened from around GH¢14.70/USD in January to approximately GH¢10.37–10.39/USD by mid-July.
Meanwhile, Ghana’s gross international reserves increased to $10.6 billion, offering about 4.7 months of import cover — a notable improvement in external buffers despite the significant FX sales.
IMF Pushes for Policy Shift
While acknowledging the effectiveness of the interventions in calming the currency market, the IMF cautioned the BoG to reduce its direct involvement and allow greater exchange rate flexibility.
“A rules-based FX intervention framework is needed to enhance transparency and market expectations,” the IMF recommended.
Economists have echoed the Fund’s call, warning that continuous interventions may distort true market signals, drain reserves, and create artificial exchange rate stability that cannot be sustained over the long term.
Funding Boost from IMF
Following the successful program review, the IMF Executive Board approved the disbursement of an additional $367 million, which was credited to the Bank of Ghana on July 9, 2025. The inflow is expected to support further reserve accumulation and fiscal stability.
Market Reaction & Outlook
Local analysts, including University of Ghana economist Professor Godfred Bokpin, have welcomed the IMF’s stance, urging the BoG to embrace a transparent FX policy that balances stability with realism.
“We can’t spend reserves endlessly to control the cedi. A rules-based approach is more sustainable,” Prof. Bokpin said.
As the government and BoG weigh the shift in FX strategy, attention will turn to the coming quarters to see if Ghana can maintain its currency gains while gradually reducing reliance on direct dollar sales.
