The Institute of Economic Affairs (IEA) has expressed its apprehension regarding the continuous instability of Ghana’s Cedi.

The IEA pointed out that the cedi has depreciated by 99.99% from 1983 to 2024, attributing the blame to successive economic managers for their inability to tackle the cedi issue effectively.

The IEA underscored the lack of proactive measures by policymakers to strengthen the cedi, criticising them for their reactive approach of waiting until the situation escalates before taking action.

In a press statement released by IEA dated Monday, May 20, it further raised apprehensions on Ghana’s reliance on the International Monetary Fund (IMF) and funding from development partners to stabilise Cedi, describing the approach as “unsustainable”.

The IEA argues that Ghana’s several encounters with the IMF have not yielded any lasting stability to the cedi.

The IEA warned that the Cedi is facing a significant threat, urging for immediate measures to mitigate this risk.

“Since Ghana adopted a flexible exchange rate regime from 1983 when the cedi was pegged to the dollar at a rate of 2.75, the currency has continued on a declining path with only short intermittent periods of stability-to May 16, 2024, when the official rate is quoted as GHS13.77=USD1.00 (or 137,700 old cedis=1 US dollar). On a cumulative basis, the cedi has depreciated by 99.99% from 1983 to 2024. It has to be noted that, mathematically, any quantity that depreciates (or devalues) by 100% falls to zero or virtually vanishes.

“…This tells us that the cedi is under an existential threat and requires urgent actions to rescue it from that threat. Unfortunately, over the years, our economic managers have failed to address the cedi problem head-on. The problem is that our policymakers have consistently failed to take the requisite measures to buttress the cedi. Almost invariably, they wait till the situation begins to get out of control before they adopt firefighting, albeit unsustainable, measures.

“For instance, presently, we seem to be waiting for the IMF’s and other developing partners’ funding before restoring some stability to the cedi. This approach, however, is not sustainable, as history has taught us. We have been to the IMF seventeen times, but that has not brought any lasting stability to the cedi.”