2026 Budget: Finance Minister Must Address Key Imports Undermining Ghana’s Forex – Prof. Lord Mensah

 

Economist and Head of the Local Government Service, Professor Lord Mensah, has urged the Minister of Finance, Dr. Cassiel Ato Baah Forson, to implement decisive measures targeting major imports that continue to drain Ghana’s foreign exchange reserves. He cautioned that short-term interventions alone will not sustain the recent stability of the cedi.

Speaking on GTV’s Current Agenda on Saturday, November 15, 2025, Prof. Mensah stressed the need for long-term structural reforms to consolidate the exchange rate gains recorded in recent months. He noted that an economy that experienced an exchange rate of GH¢17.4 to the dollar cannot be fully transformed within just ten months of a new administration.

According to him, stabilising the cedi requires strategic investment and a deliberate effort to reduce the country’s heavy import bill—particularly in sectors such as poultry and petroleum, which consume significant amounts of foreign exchange.

Prof. Mensah highlighted the 2026 Budget’s emphasis on long-term strategies, including a policy requiring a specified share of poultry consumed in Ghana—such as those supplied to secondary schools—to be locally produced by 2026. He described such initiatives as essential, noting that relying on short-term solutions like drawing on dollar reserves cannot anchor the exchange rate indefinitely.

“Countries with strong dollar reserves may experience temporary stability,” he said, “but reserves alone cannot sustain the cedi’s value. We need solid, long-term structural measures.”

The economist also pointed out ongoing declines in interest rates, inflation, and policy rates, which have raised expectations that lending rates will eventually fall. However, he cautioned that banks are unlikely to increase lending immediately, as they must carefully assess risk after a period when interest rates reached as high as 35–40 percent.

“The banks’ money is not their own,” he explained. “They manage funds on behalf of the public, so they cannot extend credit without thoroughly evaluating risk.”

He added that banks are acting prudently by holding capital while monitoring the broader economic direction. If the downward trend in inflation and interest rates continues into next year, he expects financial institutions to gradually increase lending.

Prof. Mensah concluded by emphasizing that Ghana must combine short-term interventions with strong long-term policies to sustain macroeconomic stability, safeguard foreign reserves, and support sustainable growth.

Source: