The International Monetary Fund (IMF) urges the Cabinet to prioritize adopting the amendments to the Bank of Ghana Act to enhance the Central Bank's independence.

This recommendation comes in light of the Central Bank's significant financial exposure to the Ghanaian government.

The IMF emphasizes that recapitalizing the Bank of Ghana should be approached cautiously, considering the fiscal limitations under the Economic Credit Facility program.

While the IMF acknowledges the Bank of Ghana's dedication to a prudent monetary policy, it notes that further progress is required to implement the Fund’s safeguards assessment recommendations.

“A tight policy stance—supported by robust liquidity absorption operations—is warranted until inflation approaches the target band. Against the backdrop of the recent currency depreciation, the BoG should remain prudent to ensure a reduction in the still high and volatile inflation and re-anchoring of inflation expectations. Continued progress in advancing Fund’s advice on safeguards is also warranted”.

BoG should continue rebuilding international reserves

It continued that the BoG should continue rebuilding international reserves and accelerate reforms to its foreign exchange intervention framework.

While commending the large outperformance of reserves accumulation in 2023, the IMF noted that it is partially the result of temporary factors and that, going forward, limiting foreign interventions remains key to rebuilding external buffers.

It urged the BoG to adopt a formal internal foreign exchange intervention policy framework, implement all FX interventions through an open and price-based FX auction mechanism; and reform the cedi reference rate.

These measures, it believes, would better underpin exchange rate flexibility, and deepen the exchange rate market,