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World Bank Urges Bank of Ghana to Step Back from Excessive FX Interventions

  • Writer: Derry Thornalley
    Derry Thornalley
  • Sep 1
  • 2 min read

The World Bank has called on the Bank of Ghana (BoG) to scale back its frequent interventions in the foreign exchange market, warning that overreliance on such measures risks undermining the country’s long-term economic stability.


In its latest Ghana Economic Update (July 2025), the World Bank noted that while interventions can calm the market in moments of stress, constant attempts to prop up the cedi create distortions. They mask the real balance of supply and demand for foreign currency and discourage businesses and individuals from adjusting to market conditions.


The Cost of Over-Intervention

The report explained that frequent FX interventions may provide short-term exchange rate stability, but they also:

  • Erode foreign reserves,

  • Weaken the economy’s resilience to external shocks, and

  • Delay the necessary structural adjustments businesses must make.

Instead, the Bank recommends that the BoG allow market forces to play a greater role, while limiting interventions to cases of “disorderly volatility”—sudden swings that could destabilize the financial system.


Strengthening the Financial System

The World Bank also highlighted another urgent priority: the swift recapitalisation of financial institutions. Ghana’s government has launched a Financial Sector Strengthening Strategy, and the World Bank underscored its importance.

A well-capitalized financial system, it said, will:

  • Protect against future shocks,

  • Strengthen public and investor confidence, and

  • Support Ghana’s recovery through more sustainable lending.


Accra city at night time


The Bigger Picture

Allowing the cedi to reflect true market realities may be uncomfortable in the short term. Import costs could rise, and volatility could sting. But over time, the adjustment builds credibility and resilience.

Coupled with stronger banks, Ghana would be better positioned to weather external pressures—from global commodity swings to tightening in international credit markets—without resorting to unsustainable measures.


Takeaway

Ghana’s stability hinges on a twin track:

  1. A disciplined FX strategy, where interventions are rare, targeted, and credible.

  2. A stronger banking system, recapitalized and ready to support growth.

Together, these will determine whether Ghana can move from firefighting to sustainable economic recovery.

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