Development economist and founding president of the Africa Policy Lens (APL), Dr. George Domfe, has highlighted restrained government spending as a key factor behind the recent appreciation of the Ghanaian cedi against the US dollar.
Speaking on TV3’s KeyPoints show on Saturday, Dr. Domfe acknowledged the Mahama administration’s efforts in stabilizing the local currency but pointed out that the slowdown in public spending has also played a significant role.
“While the government deserves credit for the cedi’s strength, it’s important to recognize that one major reason is the significant cutback in public spending. Many contractors have not been paid for completed projects, which reduces liquidity and demand for foreign exchange,” Dr. Domfe explained.
He also noted that the current cedi rebound mirrors past trends, cautioning against premature celebration. “This pattern is not new. We saw a similar boost when the NPP came into office in 2017. The cedi often rallies following a change in government as expectations shift, but sustaining this trend requires consistent economic policies.”
Additionally, Dr. Domfe, who is also a Senior Research Fellow at the University of Ghana, pointed to favorable global market conditions as a supportive factor.
“Commodity prices, including crude oil, have declined on the international market, reducing Ghana’s dollar-denominated import costs. This, in turn, eases pressure on the cedi,” he said.
He further credited the ongoing debt restructuring program initiated under the previous Akufo-Addo administration as a stabilizing influence on the cedi’s value, noting that the relief from high debt servicing costs has created some fiscal space.
Dr. Domfe concluded by urging the government to introduce robust, medium-term policies to consolidate these gains and ensure sustained currency stability.
