The International Monetary Fund (IMF) has advised the Bank of Ghana (BoG) to keep interest rates high to control inflation and follow its guidelines to strengthen the central bank’s operations.

The IMF emphasized that maintaining this approach, along with managing excess cash in the economy, is necessary to prevent inflation from worsening. Factors like the dry season and the recent fall in the value of the cedi could increase prices if not managed properly. The goal is to gradually bring inflation back within the Bank of Ghana’s target range.

In its review of Ghana’s progress under the Economic Credit Facility program, the IMF also stressed the importance of following recommendations to boost the central bank’s independence and improve how it operates.

The IMF added that it is important for the Bank of Ghana to focus on increasing its foreign reserves and improving how it manages foreign currency to stabilize the economy. These are key goals of the program.

“The overperformance of reserves accumulation targets is welcome but mainly reflects a significant expansion of the gold for reserves programme, which warrants careful management of related portfolio risks and liquidity implications. Going forward, limiting FX [foreign exchange] interventions remains key to rebuilding external buffers”.

“The BoG made welcome progress in adopting a more robust FX reference rate computation method—which would limit the occurrence of MCPs [Multiple Currency Practices]. Implementation of a formal internal FX intervention policy framework and replacement of bilateral adjudications with a transparent auction-based FX auctions—complying with MCPs policy requirements—are additional important steps to enhance the functioning of the FX market”, it added.