Dr. Ernest Addison, Governor of the Bank of Ghana, has addressed the challenges surrounding the stability of the Cedi and the broader macroeconomic environment, acknowledging that recovery has been slower than anticipated.
Dr. Addison noted that the expected pace of currency stabilization had been hindered by a combination of speculative activity and precautionary measures surrounding the upcoming elections.
“I mean, we should have seen a much faster recovery in terms of the stability of the currency,” he said, referencing the significant fluctuations in the Cedi’s value. The local currency, which recently surged to as high as GHS 17 against the US dollar, has since rebounded to around GHS 15.
While acknowledging the broader economic factors, Dr. Addison pointed to the election year as a key driver of the volatility.
“The speed of recovery should have been better, were it not for the fact that 2024 is an election year,” he explained, suggesting that the political climate has added an additional layer of uncertainty to an already fragile economic situation.
Despite these challenges, the Governor expressed confidence that, with the appropriate macroeconomic framework in place, the currency should stabilize in the near future.
Reflecting on recent history, Dr. Addison recalled the severe currency depreciation experienced in 2022, which he attributed to the debt exchange program and the panic it induced in the market.
“What we saw in 2022 was unusual,” he remarked, explaining that the economic turbulence led to what economists term an “overshooting” of the currency.
Looking back at his tenure, Dr. Addison noted that when he took office in 2017, the Cedi was trading at GHS 4 to the dollar. Over the following four years, the currency depreciated gradually, reaching GHS 6 to the dollar by the end of 2021. However, as debt-related pressures intensified, the Cedi faced further instability.
Dr. Addison’s comments underscore the complexities facing Ghana’s economy, where external shocks, internal policy challenges, and political factors have all converged to influence the performance of the national currency.
