The First Deputy Governor of the Bank of Ghana, Dr. Mumuni Zakaria, has dismissed claims that the central bank is depleting its foreign reserves to prop up the cedi, insisting that the recent gains in the local currency are genuine and sustainable.
“If we were that heavy in terms of our support to the market, we would not be doing well with our reserves accumulation,” Dr. Zakaria told Joy News.
He described the cedi’s rally as credible and backed by real market confidence, rejecting speculation that the Bank of Ghana is drawing down its buffers.
“Unfortunately, if this were the case, market players who are very smart would have seen through it,” he explained. “The rally would have been short-lived. They wouldn’t trust you.”
Contrary to such speculation, Dr. Zakaria revealed that the central bank has been accumulating reserves faster than expected.
“We are even accumulating reserves much, much faster than what has been expected,” he said. “And that is why the market really thinks this can be sustained.”
On the quality of the reserves, he added: “These are not debt-creating reserves. These are organically accumulated reserves. At the end of April, we had over $10 billion. We expect to hit $11 billion by the end of June.”
Dr. Zakaria noted that these reserve levels exceed International Monetary Fund (IMF) targets. “The IMF program set a target of three months of import cover. We are now at 3.7 months using IMF metrics,” he said. “If you include petroleum funds, we’re around 4.7 months. That’s quite a lot.”
Highlighting the bank’s strategic approach, he said, “We have devised very strategic ways of meeting market demand while still accumulating external buffers.”
“This time is different,” he emphasized.
Dr. Zakaria also cited other factors supporting the cedi’s strength, including the IMF Staff Level Agreement, which sent a positive signal globally.
“We’ve had a Staff Level Agreement with the IMF. That sent a strong message globally. It means things are changing.”
He pointed to progress in inflation management and fiscal consolidation.
“Inflation dropped from nearly 24% to 21.2%. That’s progress,” he said. “Fiscal consolidation is also taking shape. Public sector borrowing has slowed sharply compared to last year.”
The Deputy Governor also spoke about liquidity management. “We’ve sterilised three times more than last year,” he explained. “So we’re keeping cedi liquidity tight while still meeting forex demand.”
“We are not intervening recklessly,” he stressed. “We’re building confidence, not burning reserves.”
“This is not smoke and mirrors,” Dr. Zakaria concluded. “This is real. And we intend to sustain it.”
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