The International Monetary Fund (IMF) has credited Ghana’s dramatic fall in inflation to the strong and sustained stability of the cedi in 2025, following a year of steep depreciation that had fuelled widespread price pressures across the economy.

The cedi has appreciated by 37 percent against the US dollar as of October 17, 2025 — a sharp turnaround that reflects improved market confidence, prudent fiscal management, and tighter monetary policies.

According to the IMF, the local currency’s strong performance has been central to restoring price stability, helping inflation decline from 24 percent in 2024 to 9.4 percent in September 2025 — the lowest level recorded in four years.

The Fund noted that the contrast between last year’s rapid depreciation and this year’s appreciation clearly demonstrates how effective exchange rate management can influence inflation trends.

Speaking on Channel One TV’s Point of View with Bernard Avle, IMF Resident Representative to Ghana, Dr. Adrian Alter, explained that exchange rate dynamics are a major driver of inflation across African economies, including Ghana.

“In general, in Africa, what we have seen is that the exchange rate plays an important role in determining inflation. In 2022 you had a steady depreciation—maybe 50 to 100 percent per year—and that basically translates into about a 20 percent pass-through to inflation. So if you have 100 percent depreciation, you will have 20 percent inflation only from imported goods,” he said.

Dr. Alter noted that Ghana’s experience in 2024 followed this pattern, when a sharp currency decline and drought-induced food shortages combined to push inflation higher.

“The other component was the exchange rate. The exchange rate was depreciating last year, while this year it is appreciating,” he emphasised.

The World Bank has already ranked the cedi as the best-performing currency in Sub-Saharan Africa for the first eight months of 2025, underscoring the impact of sustained fiscal discipline, external support, and foreign exchange market reforms.

Dr. Alter added that the cedi’s current stability—underpinned by tighter monetary policy and improved fiscal management—has anchored inflation expectations, strengthened investor confidence, and set the stage for a more durable macroeconomic recovery.

He concluded that maintaining this momentum will be key to consolidating Ghana’s economic gains and safeguarding price stability in the years ahead.