Ghana’s exchange rate loss of nearly 40% in the past year is the highest in Africa, according to the World Bank. The depreciation of the cedi has been driven by a number of factors, including rising inflation, high energy prices, and concerns about the country’s fiscal deficit.
The weak cedi has had a significant impact on the Ghanaian economy. It has made imports more expensive, which has pushed up inflation and eroded the purchasing power of Ghanaians. The depreciation has also made it more difficult for businesses to export goods and services, which has hurt economic growth.
The World Bank is concerned about the impact of the weak cedi on Ghana’s economy. In its latest report, the bank warned that the depreciation could lead to a further increase in inflation, a decline in economic growth, and a widening of the country’s fiscal deficit.
The bank urged the Ghanaian government to take steps to stabilize the cedi. These steps could include tightening monetary policy, reducing the fiscal deficit, and increasing foreign exchange reserves.
The government has taken some steps to address the depreciation of the cedi. In June 2023, the central bank raised interest rates by 200 basis points. The government has also announced plans to reduce the fiscal deficit and increase foreign exchange reserves.
However, it remains to be seen whether these measures will be enough to stabilize the cedi. The country is facing a number of challenges, including rising inflation, high energy prices, and concerns about the country’s debt sustainability.
The weak cedi is a major challenge for the Ghanaian government and economy. It is important for the government to take steps to stabilize the cedi and protect the country from the negative impact of the depreciation.
In addition to the measures already taken by the government, the following could be considered:
- Increased transparency in the management of public finances
- Reforms to the energy sector to reduce costs
- Support for businesses to export more goods and services
- Increased investment in infrastructure to boost economic growth
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