Professor Godfred Bokpin of the University of Ghana Business School says the cedi’s gains against major foreign currencies particularly the US dollar are largely due to a significant GHC10 billion reduction in government expenditure within the first five months of the new administration.
Speaking on TV3’s KeyPoints programme, Prof Bokpin credited the current government’s fiscal discipline , in sharp contrast to the previous administration’s high-spending approach. He described the move as a long-overdue step towards stability.
“We have seen this government do within five months what we’ve been calling for since COVID-19,” Prof Bokpin noted. “Cutting wasteful spending and opting for gradual fiscal consolidation was always the way forward. Now it’s finally happening.”
The economist was responding to competing claims over what has led to the cedi’s turnaround. While the current government highlights intentional policy shifts, some members of the former ruling New Patriotic Party (NPP) argue that the foundation for the improvement was laid during their tenure. The opposition NDC government, however, has only been in office for a few months.
For Prof Bokpin, the debate misses the point. He attributes the turnaround to what he calls “painful but necessary” choices being made at the highest levels of government. “This is leadership. The collaboration between the Finance Minister, Dr Cassiel Ato Forson, and the Governor of the Bank of Ghana, Dr Johnson Asiama, is clearly delivering results,” he said.
He pointed to past fiscal missteps that contributed to Ghana’s current economic challenges. In 2022, he recalled, the Bank of Ghana pumped excess liquidity into the system, fuelling inflation and pushing over 800,000 Ghanaians into poverty.
That mistake, he noted, was compounded in 2024 when Ghana fell short on most of its IMF programme targets except GDP growth and international reserves. “When it came to fiscal consolidation, which is the cornerstone of the IMF programme, we failed,” Bokpin explained.
The shift in the 2025 budget marks a course correction, he said. Ghana has moved from a negative primary balance exceeding 3% of GDP to a surplus of 1.5%, restoring some credibility to its IMF commitments.
Yet, the gains have come at a cost. Growth projections for 2025 are lower than the fiscal outturns of 2024, underlining the trade-off between economic expansion and financial discipline. “In simple terms, the economy was overheating. They had to cool it down,” Prof Bokpin said.
He warned, however, that sustaining the current momentum will require continued restraint. “We must remember that the results we are seeing today are fragile. Any slip back into reckless spending could undo the progress,” he cautioned.
The cedi’s performance may be a cause for optimism, but for Prof Bokpin, the real victory lies in a broader shift in Ghana’s economic mindset—from quick fixes to long-term discipline.
