Economist and Research Lead at GCB Capital, Courage Boti, is warning that the cedi will lose the most if the government is unable to get  an International Monetary Fund Board (IMF) board approval by the end of this month.

He argues that the current suspension of interest payments on Ghana’s external loans is the main reason for the relative gains or slow depreciation by the cedi.

Speaking to Joy Business, Mr. Boti pointed out that time is of essence to clinch a deal and give certainty to investors.

He stated that getting a deal will restore confidence and indicate that the economy is on a recovery path, a signal that could increase the gains of the cedi in the coming months.

“Given the very weak external balances that we have, I think the cedi is showing what the fundamentals are suggesting. That probably is because the pressures we see when we pay interests on external loans have been suspended”, he said.

He is of the view that the cedi will continue to show some level of stability if a deal is secured with the IMF and the external debt restructuring programme is completed.

This, he suggested will boost investor confidence and gradually pave the way for Ghana to return to the international bonds market in the long term.

Predictions on cedi performance

In its latest report published in April, 2023, the Economist Intelligence Unit (EIU) forecast a 30% depreciation of the cedi to the dollar in 2023.

This is however lower than the about 44% depreciation of the local currency in 2022.

The UK based firm said it expects the cedi to depreciate significantly this year.

“We now expect the currency to weaken to ¢12.46:US$1 at end­ 2023 (from ¢10.95:US$1 as at mid­-April).”

It further said that the cedi depreciation will be driven by increased demand for hard currency due to high import prices, inflation, capital flight, rising profit repatriation by Ghanaian-based multinationals and weak investor sentiment in the face of the ongoing debt crisis.