Keeping the cedi stable in 2024 election year paramount to the BoG – Dr Addison

Governor of the Central Bank, Dr Ernest Addison, says maintaining the stability of the local currency this year – election year – is of enormous importance to the Bank of Ghana.

According to him, the Central Bank and to a large extent the Government, have no choice but to ensure tight fiscal consolidation amid the election year to keep the cedi stable.

“Ghana doesn’t have a choice but to do so, because we have all seen what an economic crisis can do. The lessons are fresh on everybody’s mind. And the need to keep the currency stable is paramount going into the election,” the Governor noted during an interview with Christopher Jeffery on the sidelines of the ECCB 40th anniversary and Central Banking Autumn meetings in Saint Kitts and Nevis.

According to IC Research, the local currency is forecasted to lose about 8.4% in value to its anchor currency (dollar) in the retail market in 2024.

The expected depreciation of the cedi will be far lower than the 15% recorded last year.

“In full year 2024, we foresee the mid-US dollar Ghana cedi rate at ¢13.1/US dollar (-8.4% annual loss),” noted IC Research adding that, it expects improved economic fundamentals in 2024, as a result of expected multilateral inflows and appropriate monetary policy stance by the BoG.

This will partly offset election-related and external debt restructuring uncertainties.

With 2024 being an election year, expectations lean toward increased government spending which could lead to rising inflation and subsequently a depreciation of the cedi.

Bloomberg pegged the cedi at GHS 11.95 to the greenback on December 29, 2023, the last day of trading in 2023. Currently, the cedi-dollar exchange rate stands at GHS 12.17 to $1.

Fitch Solutions, however, notes that any fiscal slippage in 2024 is unlikely to undermine investor confidence, thereby avoiding potential ramifications such as currency depreciation, inflationary pressures, and social unrest.

Source:norvanreports