I have observed attempts by some government and NDC communicators, with limited understanding of monetary policy and IMF program negotiations, to dispute Dr. Mahamudu Bawumia’s statement that the previous government operated under an IMF-imposed cap of $80 million per month on FX intervention.
Their reference to the $3 billion FX sales figure in the IMF ECF 4th Review Report to claim an average of $250 million per month, and therefore no $80 million cap existed, is a fundamental misreading.
The facts are as follows:
a. There was an agreed intervention cap, scaling down from $80m to $60m.
As part of the program conditionalities to rebuild Ghana’s international reserves to agreed thresholds, the IMF and the Bank of Ghana agreed on a strict monthly budget for direct FX intervention capped at $80 million and subsequently scaled down to $60 million. The previous government adhered strictly to this.
It is because of that discipline that by end-2024, Ghana had exceeded the reserve build-up target required by the IMF. That overperformance is what gave the IMF the comfort to relax the cap and allow the current government to intervene beyond the $80m/$60m limit.
b. Market-sensitive details are redacted from IMF publications.
As is standard practice in all IMF negotiations, information on intervention caps is market-sensitive. If the market were to know that the central bank could not intervene beyond $80 million, it would create speculative attacks against the cedi.
For that reason, when agreements are presented to the IMF Board, such figures are redacted before publication. You will therefore not find the cap explicitly stated in the published staff report. Its absence in the report does not mean it did not exist.
c. The $3 billion figure confuses FX Auction with FX Intervention.
Those citing the $3 billion are confusing two different BoG operations. The Bank of Ghana operates both an Auction budget and an Intervention budget. Both together make up the total FX sales figure reported.
FX Auction is pre-announced and rules-based. FX Intervention is discretionary and used to smooth volatility. They are not the same.
In fact, recent IMF reports have now added a third window, the intermediation budget.
Adding up auction, intervention (+ now Intermediation) is what gives you the total $3 billion.
It is therefore wrong to divide $3 billion by 12 and call it proof of intervention.
