The Akufo-Addo administration has come under fire from Dr. John Kwakye, the Director of Research at the Institute of Economic Affairs (IEA), for relying too heavily on funding from the World Bank, the IMF, and other donor organizations to support the local currency.

He referred to the government’s excessive dependence on foreign assistance, such as Eurobonds and syndicated loans backed by cocoa, as a “lazy man’s approach.”

In an analysis of the recent Bank of Ghana (BoG) Monetary Policy Committee meeting, Dr. Kwakye said that an excessive dependence on foreign aid is unsustainable during an IEA press briefing on Wednesday, April 3.

When the loan repayment is due, Dr. Kwakye thinks the pressure on the cedi will increase again.

“The Governor admitted that the foreign exchange market came under some pressure, both seasonal and non-seasonal-in February and early March. He reported that in the year to 20th March, 2024, the Ghana cedi recorded a depreciation of 6.8 percent against the US dollar. He, however, stated that the cedi “continues to recover its value.” But the question is by what measure?

“Certainly, not in nominal terms because since he spoke on 25th March, the cedi has continued to depreciate, reaching nearly GHS13 to the dollar. Let us repeat right here that relying on funds from the IMF, World Bank, Eurobonds, cocoa syndicated loan, etc. to bolster the cedi, as we have been doing, is not only “a lazy man’s approach,” to say the least, but also clearly unsustainable as the pressure would be back on when the loans fall due for repayment.”

The best strategies to stabilize the cedi, according to Dr. Kwakye, are to decrease import demand and boost forex profits.

“The way to stabilise the cedi on a durable basis is to increase our FX earnings through greater ownership of, and value addition to, our natural resources, to reduce our import demand through domestic industrialisation and to entrench fiscal and monetary discipline,” Dr Kwakye said.