The Institute of Economic Affairs (IEA) has expressed concern about the ongoing instability of Ghana's currency, the Cedi.

According to the IEA, the Cedi has depreciated by 99.99% from 1983 to 2024, placing blame on successive economic managers for their failure to effectively address the Cedi's challenges.

The IEA criticized policymakers for their reactive approach, waiting until the situation worsens before taking action, and emphasized the need for proactive measures to strengthen the Cedi.

In a press statement dated Monday, May 20, the IEA also raised concerns about Ghana's reliance on the International Monetary Fund (IMF) and development partners for stabilizing the Cedi, describing this approach as "unsustainable."

The IEA contends that Ghana's multiple engagements with the IMF have not resulted in lasting stability for the Cedi.

They caution that the Cedi is confronted with a substantial threat, urging immediate measures to address this risk.

“Since Ghana adopted a flexible exchange rate regime from 1983 when the cedi was pegged to the dollar at a rate of 2.75, the currency has continued on a declining path with only short intermittent periods of stability-to May 16, 2024, when the official rate is quoted as GHS13.77=USD1.00 (or 137,700 old cedis=1 US dollar). On a cumulative basis, the cedi has depreciated by 99.99% from 1983 to 2024. It has to be noted that, mathematically, any quantity that depreciates (or devalues) by 100% falls to zero or virtually vanishes.

“…This tells us that the cedi is under an existential threat and requires urgent actions to rescue it from that threat. Unfortunately, over the years, our economic managers have failed to address the cedi problem head-on. The problem is that our policymakers have consistently failed to take the requisite measures to buttress the cedi. Almost invariably, they wait till the situation begins to get out of control before they adopt firefighting, albeit unsustainable, measures.

“For instance, presently, we seem to be waiting for the IMF’s and other developing partners’ funding before restoring some stability to the cedi. This approach, however, is not sustainable, as history has taught us. We have been to the IMF seventeen times, but that has not brought any lasting stability to the cedi.”