Okaikwei Central MP urges government to enforce stricter fiscal discipline to ensure Cedi stabilization
Okaikwei Central MP urges government to enforce stricter fiscal discipline to ensure Cedi stabilization
Member of Parliament (MP) for Okaikwei Central constituency in the Greater Accra region, Mr. Patrick Yaw Boamah has admonished the John Mahama led government to practice stricter fiscal discipline to ensure Cedi stabilisation.
According to him, the recent appreciation of the country’s currency (the Cedi) against the U.S. dollar could be short-lived without strict fiscal discipline and robust confidence-building efforts.
Speaking in an interview on the sidelines during the International Monetary Fund (IMF) and World Bank (WB) Spring Meetings held in Washington, D.C., the Okaikwei Central lawmaker welcomed the Cedi’s improved performance, from Ghc15 to around Ghc14 per dollar, but was quick add that the gains made could be eroded citing deep-rooted structural challenges in the financial sector.
“As someone who follows the economic space closely, I believe confidence is key. The attitude and credibility of economic managers have a direct impact on how investors perceive the future of the cedi,” Mr. Boamah emphasized.
He pointed to an expected disbursement of over $300 million from the IMF as a short-term buffer to support Ghana’s foreign reserves and temporarily stabilize the local currency.
“Yes, this funding will boost reserves and can help restore some level of market confidence. But we must not be deceived into thinking that this alone guarantees long-term stability,” the Okaikwei Central MP said.
Mr. Boamah again drew attention to what he described as a looming fiscal crisis, stressing the government’s GH¢18 billion in unpaid arrears.
He warned that any sudden move to clear these backlogs by injecting large sums into the economy could exert significant downward pressure on the cedi.
“These arrears have gone unpaid for six months. If the government suddenly starts releasing funds to pay contractors and service providers, the currency could suffer due to excess liquidity,” he cautioned.
The MP also questioned the integrity of the recent cedi appreciation, suggesting it may not be driven by genuine economic improvements.
“Is this recovery organic or artificial? That’s the question we must ask. If it’s not underpinned by solid fundamentals, it won’t last,” he stressed.
Beyond domestic risks, Mr. Boamah flagged external threats, including U.S.-China trade tensions and global currency movements that could further destabilize the cedi.
He noted that the global environment plays a significant role in shaping Ghana’s exchange rate dynamics. Citing recent IMF and World Bank data which pointed out that Ghana’s economic projections are already being downgraded.
“We had a growth rate of 5.7% projected for 2024, but it’s been revised down to 3.9%. Our debt-to-GDP ratio stands at 61.8%, and these figures reflect the underlying vulnerabilities.
This brief appreciation of the cedi should not be mistaken for a turnaround, and the real test lies ahead, depending on how the government manages its debt, tackles arrears, and restores investor confidence, will determine whether the currency holds or falters, the Okaikwei Central MP noted.
