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No Need To Rush For Forex - Finance Minister Cautions

Minister for Finance, Dr. Mohammed Amin Adam has cautioned against the recent panic-driven rush for foreign exchange in the country that has seen the Cedi lose grounds against its major trading partners.

Speaking during the Ministry of Finance’s Monthly Economic Update on Friday, May 24, 2024, the Minister attributed the current exchange rate pressures to the strengthening of the US Dollar against major trading currencies, seasonal forex demand, and other temporary factors affirming that the government is implementing robust measures to ensure continued stability.

"There is no need to rush and buy forex," the Finance Minister declared, pointing to an anticipated inflow of at least $2.32 billion by the end of the year. He highlighted multiple sources of these inflows, including disbursements from the IMF and World Bank, the Gold-for-Oil Programme, the Bank of Ghana’s (BoG) Gold for Reserves programme, and proceeds from the Cocoa Syndicated Funds.

“We expect total disbursements of at least US$2.32 billion before the end of the year to add to the significant foreign exchange reserves already built up by the BoG,” he added.

He acknowledged recent pressures but remained optimistic about the medium-term stability of the Cedi with a cumulative depreciation of 14.2% as of 20th May 2024, compared to 20.7% recorded in the same period in 2023.

Dr Amin Adam maintained that the Cedi is expected to be largely stable and improve in the medium term as the government completes its debt restructuring, makes more progress on fiscal consolidation, and improves the country’s reserves over the same period.

The Minister also detailed the progress made under the IMF-Supported Post-COVID-19 Programme for Economic Growth (PC-PEG). Following a successful 2nd Review Mission by the IMF in April 2024, Ghana secured a Staff Level Agreement (SLA), paving the way for the IMF Executive Board to consider and approve the disbursement of a third tranche of $360 million in June, bringing total disbursements to $1.56 billion.

“The positive results of the first and second reviews of the implementation of the IMF-supported Programme testify that we are achieving the Programme’s objective of restoring macroeconomic stability and debt sustainability,” the Minister remarked.

He noted the resilience of the economy, citing a 2.9% GDP growth in 2023, surpassing both the original projection of 1.5% and the revised projection of 2.3%.

The Minister assured that the Ministry of Finance is working closely with the BoG to implement measures to address the perennial depreciation of the Cedi, including fast-tracking fiscal consolidation, intensifying the Gold-for-Oil and Gold for Reserves programmes, and strategic FX interventions by the BoG.