Ghana’s efforts to keep the cedi artificially strong are beginning to hurt government revenue collection, particularly from import duties at the ports, according to Kwadwo Poku, Executive Director of the Institute for Energy Policies and Research.
Poku warned that the Bank of Ghana and Ministry of Finance are using vast resources to defend the cedi at a level that doesn’t reflect real market conditions, a move he believes offers short-term relief but long-term fiscal pain. Speaking on JoyNews’ AM Show, he argued that while the intervention has temporarily eased fuel prices, the strategy’s already creating unintended consequences for tax collection.
“Since the FX value has been made low, it’s also affecting GRA’s receivables from the ports,” he said, explaining that import duties are being calculated at an artificially low exchange rate, cutting into the government’s revenue base at a time when fiscal pressures remain intense.
The energy analyst argued that the cedi’s current rate against the dollar is being kept below its natural value, which he placed between GH¢12.40 and GH¢12.50 per dollar. Keeping it lower than that, he warned, risks widening what he described as a $21 billion hole in the national budget resulting from currency management policies and reduced government spending.
“It has never been the case where the Bank of Ghana is doing the semantics they are doing to forcefully keep the dollar at a certain price when in reality we know they are using a lot of resources to do that,” he added, questioning the sustainability of central bank interventions that mask underlying market pressures.
The immediate benefit of this policy became visible in the latest petroleum pricing window effective November 1st, with petrol prices expected to fall by about 5.2 percent and diesel by between 6 and 8 percent, according to the Chamber of Oil Marketing Companies. For consumers facing persistent cost of living pressures, any fuel price reduction brings welcome relief, even if temporary.
However, Poku believes the drop won’t last if the exchange rate isn’t allowed to reflect market forces. He warned that with winter approaching, international fuel prices could rise again, putting additional pressure on the cedi and potentially reversing the current price gains at the pump.
The tension between exchange rate management and revenue collection highlights a broader dilemma facing Ghana’s economic policymakers. Strong currency values reduce inflation and lower import costs, providing immediate political benefits. But when those values are artificially maintained rather than market driven, they create distortions that ripple through the economy in unexpected ways.
Import duties represent a significant revenue source for Ghana, with the ports serving as crucial collection points for government finances. When customs officials calculate duties based on exchange rates that don’t reflect actual market conditions, the government effectively collects less revenue on the same volume of imports. For a country struggling to meet fiscal targets under its International Monetary Fund program, this revenue leakage becomes particularly problematic.
The Ghana Revenue Authority has reportedly been struggling to meet its revenue targets as a result of the government’s approach to managing the exchange rate. While GRA faces multiple challenges beyond exchange rate policies, including tax compliance issues and collection inefficiencies, the artificial currency valuation adds another layer of difficulty to an already complex revenue mobilization environment.
Poku’s concerns align with broader questions about Ghana’s foreign exchange management strategy. The Bank of Ghana supported the foreign exchange market with substantial dollar injections throughout 2025 to preserve cedi stability, interventions that reflect growing international reserves but also raise questions about sustainability.
Ghana’s international reserves have improved significantly, reaching approximately $12 billion by mid 2025, up from much lower levels during the country’s debt crisis period. This reserve buildup, driven largely by record gold prices and improved fiscal management, has given authorities more ammunition to defend the cedi. But reserves aren’t infinite, and using them to maintain exchange rates disconnected from fundamentals eventually depletes this buffer.
The cedi’s performed remarkably well in 2025 compared to recent years, appreciating 42.6 percent against the US dollar by midyear after years of steady depreciation. That turnaround reflected improved macroeconomic fundamentals, including tighter fiscal policy under Finance Minister Dr. Cassiel Ato Forson and disciplined monetary policy from Bank of Ghana Governor Dr. Johnson Pandit Asiama.
Yet by late October 2025, the cedi had weakened to around GH¢10.90 per dollar on the interbank market, still stronger than Poku’s suggested natural rate but showing signs of renewed pressure. The currency’s trajectory suggests that maintaining artificial stability becomes increasingly difficult as external pressures mount, including a stronger US dollar globally and potential capital outflows.
The broader fiscal picture complicates matters further. According to Bank of Ghana monetary policy reports, the Ministry of Finance fell GH¢21.5 billion short of its own planned expenditure for 2025, largely due to revenue shortfalls. Poku attributes these shortfalls partly to the currency situation, arguing that artificially low exchange rates reduce customs revenue while depleting reserves that could otherwise support government financing.
There’s also the cocoa dimension to consider. When the government announced its producer price for cocoa in August using an exchange rate of GH¢10.4 to the dollar, global cocoa prices stood much higher than current levels. With prices having dropped from over $11,000 per ton earlier in 2025 to around $5,939 per ton by October, the Ghana Cocoa Board now finds itself paying farmers a much higher percentage of FOB prices than financially sustainable, further straining government finances.
Poku urged authorities to be more transparent in managing the exchange rate and petroleum pricing, warning that masking the true value of the cedi could distort fiscal planning and undermine investor confidence. Transparency matters because markets eventually price in underlying realities, and when official rates diverge too far from market perceptions, parallel markets emerge and confidence erodes.
The energy analyst called for a realistic exchange rate policy, greater transparency in public finances, and renewed focus on revenue mobilization across key export sectors. His argument essentially advocates for allowing the cedi to find its market level rather than artificially propping it up through interventions that create more problems than they solve.
This debate touches fundamental questions about economic management philosophy. Some economists argue that exchange rate stability is crucial for controlling inflation and maintaining business confidence, justifying interventions to smooth volatility. Others contend that market determined rates, while potentially more volatile, provide accurate price signals that help allocate resources efficiently and prevent distortions.
For Ghana, the choice isn’t straightforward. The country’s recent experience with sharp currency depreciation, which saw the cedi lose nearly two thirds of its value between 2022 and early 2025, created enormous economic hardship and contributed to the debt crisis that required IMF intervention. Authorities understandably want to avoid repeating that experience.
However, Poku’s warning suggests that preventing currency depreciation through artificial means rather than addressing underlying fundamentals simply defers pain while creating new problems. Reduced port revenues, depleted reserves, and fiscal targets missed because of exchange rate distortions could ultimately prove more damaging than allowing gradual, market driven currency adjustment.
The government faces difficult tradeoffs as it approaches the 2026 budget season in November. Maintaining artificially strong exchange rates keeps fuel prices lower and inflation subdued, providing political benefits in the near term. But if that policy undermines revenue collection and depletes reserves, it could trigger a sharper correction later when interventions become unsustainable.
What remains unclear is whether current exchange rate levels genuinely reflect improved fundamentals, record gold prices, tighter fiscal policy, and rebuilt reserves, or whether they’re being artificially maintained through unsustainable interventions. The answer to that question will determine whether Ghana’s currency stability proves durable or temporary.
For now, Poku’s warned Ghanaians to brace for tough times ahead as fiscal challenges intensify. “All is not well. The finance sector is facing serious challenges. Cocoa, one of our biggest earners, is struggling. And the GH¢21.5 billion that Ato Forson is not spending is because he’s not getting the revenue, largely due to this cedi to dollar issue,” he asserted.
The debate over exchange rate management will likely intensify as Ghana navigates competing pressures: maintaining stability to support economic recovery, collecting sufficient revenue to meet fiscal targets, and preserving international reserves to cushion against external shocks. Finding the right balance between these objectives represents one of the most critical challenges facing Ghana’s economic policymakers.
