The depreciation of the Ghanaian Cedi recently has significantly impacted the country’s economic landscape, leading to labour agitations, the collapse of some businesses, and the relocation of others to more business-friendly countries.
This is based on the 2024 Mid-Year Budget Review by the Institute of Statistical, Social and Economic Research (ISSER) titled “A Critical Assessment of the 2024 Mid-Year Budget by ISSER”.
The report highlights that in the first half of 2024, the Cedi depreciated by 18.6% against the US dollar, 17.9% against the Pound Sterling, and 16.0% against the Euro.
This follows a depreciation of 27.8%, 31.9%, and 30.3% against the US dollar, Pound Sterling, and Euro respectively in 2023 and 30.0%, 21.2%, and 25.3% against the same currencies in 2022.
These figures suggest a degree of stabilization in the exchange rate over the past three years, despite the Cedi being more volatile in the first half of 2024 compared to the same period last year.
ISSER noted, “It must be reiterated that the high exchange rate in Ghana has partly contributed to labour agitations, high cost of doing business, and the collapse of some businesses while others relocated to more business-friendly countries”.
The report urges immediate government action to reduce currency depreciation, increase exports, and lower demand for trade forex.
ISSER recommends, “The recent policies by the central bank to enforce the forex regulations, in addition to having increased presence on the exchange rate market, should be intensified”.
ISSER’s assessment underscores the need for robust economic policies to address the adverse effects of currency depreciation.
Reducing exchange rate volatility is crucial for creating a stable business environment, encouraging investment, and mitigating economic pressures that lead to labour unrest and business relocations.
