Economic analyst Dr. Kwasi Nyame Baafi has cautioned that Ghana risks undermining its long-term economic stability if the government continues heavy intervention in the foreign exchange market while relying on short-lived inflows such as gold exports to stabilise the cedi.
Speaking on the Asaase Breakfast Show on Friday (21 November) during an assessment of the 2026 Budget, Dr. Baafi said government’s continuous injection of more than $1 billion into the market to slow the depreciation of the cedi is unsustainable — especially as the country’s reserves were designed for emergencies, not for routine intervention.
“If government is pumping over a billion dollars just to aid the cedi’s appreciation, it means we are depleting the very reserves meant for emergency situations,” he said, warning that Ghana could face sharp instability if it exits the IMF programme without adequate buffers.
Gold Board Impact “Overstated”
Dr. Baafi also challenged government claims that the establishment of the Gold Board had significantly boosted foreign exchange inflows.
Citing Bank of Ghana’s 2025 summary statistics, he argued that gold exports were already rising in late 2024 — long before the Gold Board became operational.
“Gold exports exceeded $10 billion by December 2024. So on what basis are we claiming that the new exports of about $11.2 billion are because of the Gold Board, when prices have actually shrunk globally?” he questioned.
He said such misinterpretations could lead to poor policymaking, especially if government assumes that high gold-related inflows will continue uninterrupted.
Exports Becoming Less Competitive
Dr. Baafi further warned that the over-appreciation of the cedi could hurt Ghana’s export competitiveness, citing the example of agric-based exports like cashew.
“If our currency keeps appreciating, our exports become more expensive, and that reduces international demand,” he said.
“This could lead to job losses, lower incomes for farmers, and reduced tax revenue.”
24-Hour Economy Funding “Symbolic”
Turning to the government’s flagship 24-hour economy, Baafi said the budgetary allocation of just GHC 19 million — about 0.18% of the $4 billion the programme’s own coordinator says is needed — is “hopelessly inadequate.”
“It means the policy cannot be implemented successfully and will remain symbolic,” he argued.
Doubts Over Job Creation Claims
Dr. Baafi also raised concerns about government’s claim of creating 800,000 new jobs, saying most of those jobs are tied to government-funded infrastructure projects under the Big Push Agenda.
“If government expenditure is what is creating the jobs, then where is the private sector? What private-sector policies are driving job creation?” he asked.
He added that government’s track record makes its projections questionable.
“In the 2025 budget, government planned to commit itself to a certain level of public expenditure but only achieved 24% of that target. If it couldn’t do it then, why should we believe it can now?”
Source: asaaseradio.com
