Ghana’s economic landscape in 2025 presents a striking paradox. The cedi has emerged as one of the world’s best-performing currencies, appreciating by approximately 16% against the US dollar and contributing to a decline in inflation to 21.2% by April 2025.
This remarkable turnaround follows a turbulent 2024 when the currency depreciated by nearly 24%, fueling economic instability and eroding purchasing power. Yet, despite these positive macroeconomic indicators, ordinary Ghanaians continue to grapple with persistently high prices for goods and services.
This phenomenon is not without historical precedent. Ghana’s economic history reveals several instances where currency appreciation failed to translate into immediate consumer benefits. Understanding both the current drivers of the cedi’s strength and these historical parallels provides crucial insights for policymakers seeking to convert macroeconomic gains into tangible improvements in citizens’ lives.
The Drivers of Cedi Appreciation
The cedi’s resurgence stems from a confluence of domestic policy reforms and favorable global economic conditions. Domestically, the Bank of Ghana’s Gold4Oil and now GoldBod initiative has been instrumental, increasing gold reserves by 40.6% from May 2024 to April 2025.
This strategic accumulation has not only strengthened Ghana’s foreign exchange buffer but also boosted investor confidence and reduced speculative pressures on the currency. The program’s requirement that 20% of gold export proceeds be converted into cedis before dollar exchange has further stabilized forex supply.
Concurrent fiscal reforms under Ghana’s IMF program have significantly contributed to the currency’s recovery. The government’s elimination of distortionary taxes like the E-levy and the intent to abolish the COVID-19 levy combined with prudent expenditure cuts, has enhanced fiscal credibility.
The $3 billion Extended Credit Facility from the IMF has restored economic confidence, with an anticipated $370 million tranche expected soon. These measures have been validated by S&P Global Ratings’ upgrade of Ghana’s credit status from Selective Default to CCC+.
The temporary suspension of external debt repayments through Ghana’s ongoing restructuring program has provided crucial breathing room, with the next major payment due in July 2025. This respite has alleviated pressure on foreign exchange reserves, enabling the cedi to stabilize. The Bank of Ghana’s direct market interventions, including a $490 million forex injection in April 2025, have further supported the currency’s appreciation.
Global economic shifts have complemented these domestic efforts. The US dollar’s weakening due to trade tensions and recession concerns has indirectly benefited emerging market currencies like the cedi, with the DXY index falling approximately 10% since January 2025.
Simultaneously, record prices for Ghana’s key exports—gold reaching $3,400 per ounce and cocoa hitting $10,000 per ton—have significantly boosted foreign exchange inflows.
The formalization of small-scale mining operations has augmented these gains by increasing legally exported gold volumes.
The Persistent Challenge of Price Stickiness. Despite these favorable currency movements, consumer prices remain stubbornly high due
to several structural and behavioral factors. Price stickiness—the economic phenomenon where prices adjust more readily upward than downward—plays a significant role.
Businesses, uncertain about the sustainability of the cedi’s strength, hesitate to reduce prices. Many operate under long-term contracts for rent, utilities, and wages negotiated during higher inflation period.
