Profesor Isaac Boadi, executive director of the Institute of Economic Research and Public Policy (IERPP), says the persistent depreciation of Ghana’s currency, the cedi, is driven by structural imbalances in foreign exchange supply and demand, even as several macroeconomic indicators show signs of recovery.

The comments by Professor Boadi come after the cedi was ranked the worst-performing currency in sub-Saharan Africa this year, following a more than 10% year-to-date decline, according to a Reuters report citing data from the London Stock Exchange Group (LSEG).

Boadi questioned the narrative surrounding the currency’s performance, arguing that Ghana’s underlying economic indicators suggest improvement despite the cedi’s slide.

“A currency that was championed as the best in the world months ago is today described as the worst-performing currency. When will we stop this narrative?” he said on Asaase Radio’s Saturday discussion programme The Forum.

He cited declines in inflation, improvements in foreign exchange reserves, reductions in debt ratios and gains on the Ghana Stock Exchange as evidence that the Ghanaian economy is growing stronger.

According to Boadi, inflation has fallen from roughly 21% to 3.4%, while public debt has dropped from 54% of GDP to 42.2%, partly due to rebasing effects.

He added that reserves had increased from about $3 billion to $13 billion, while the Ghana Stock Exchange had recorded gains of approximately 75%.

“It tells you that on paper we are doing well,” Boadi said, referring to official descriptions of the economy as moving “from ICU to a wellness centre”.

“But the citizens are too weak to walk away from the hospital,” he added, suggesting that improvements have yet to ease economic pressure on households.

Professor Boadi said the cedi’s weakness is driven largely by a persistent demand for foreign exchange, particularly from the energy sector and import-dependent businesses, that consistently outstrips supply.

He observed that export earnings and Bank of Ghana foreign exchange auctions remain insufficient to meet demand pressures in the market.

“When demand always outpaces supply, your currency will always have problems,” he said.

He also pointed to Ghana’s reliance on imports and limited value addition as key structural constraints affecting cedi stability.

According to him, seasonal spikes in import demand in the lead-up to Christmas are likely to increase pressure on the cedi later in the year.

“We are in May. By August or September, when importers are looking for forex for Christmas, we will come back to this same conversation,” he said.

Professor Boadi said long-term stability would require boosting exports, expanding domestic production and reducing dependence on imports.

“If a country is not selling things that have value and bringing in more reserves, this paradox will not be settled,” he said.

The continued depreciation of the cedi has fuelled debate over the disconnect between improving macroeconomic indicators and persistent pressure on the currency.