In recent months, the Bank of Ghana’s interventions in the foreign exchange (FX) market have been a prominent topic in public discussions about the economy. These interventions, typically involving the injection of about US$10 million in various tranches, are part of a broader effort to stabilize the cedi, reduce its volatility, and restore confidence among businesses, investors, and the general public.
While the concern behind these efforts is understandable, there is a more pressing issue that must be addressed: **the cost of stabilizing the cedi should not come at the expense of workers**.
### The Immediate Impact of Currency Depreciation on Workers
A rapidly depreciating currency hits workers and low-income households hardest. When the cedi weakens sharply, the prices of imported goods such as fuel, food, medicines, and even everyday household items rise almost immediately. Workers, whose wages are often adjusted infrequently, feel this pressure more acutely. The increased cost of living, paired with stagnant wages, erodes their purchasing power and diminishes their standard of living.
From this perspective, any policy aimed at slowing the depreciation or preventing a sudden collapse of the cedi may seem like a relief. However, the crucial question is: **Is this short-term stability sustainable and equitable?** And more importantly, does it align with the broader development needs of the country, especially the needs of the workers who are at the heart of the economy?
### The Use of Public Resources for FX Interventions
Foreign exchange market interventions rely heavily on public resources—resources that, in Ghana’s case, largely come from the country’s natural wealth, especially gold. These are not private assets but national resources, held in trust for both current and future generations. Therefore, their use must reflect clear social priorities, such as job creation, quality public services, and strong social protection systems.
For many workers, especially those in the public sector, the benefits of these FX interventions are indirect and limited. Teachers, healthcare workers, and other public servants continue to face high transport fares, rising food prices, expensive housing, and escalating utility bills. Even when the cedi appears stable, the cost of living remains high, and once prices rise, they rarely fall back down to affordable levels.
### The Impact on Education and Public Services
In the education sector, the challenges are compounded by systemic issues. Schools and tertiary institutions frequently experience delayed budget releases, inadequate infrastructure, and shortages of essential resources. Laboratories lack equipment, hostels are overcrowded, and staff are overworked. When substantial public resources are used to defend the currency, but not enough is invested directly into education, both workers and students are left behind.
### The Risk of Sustainability
There is a serious concern about the sustainability of this approach. Constant reliance on FX interventions exposes the economy to future shocks. Commodity prices are volatile, and external economic conditions can change rapidly. If reserves weaken or external inflows diminish, the adjustments could be sudden and severe, often leading to inflation, cuts in public spending, job losses, and renewed austerity measures. In these circumstances, it is usually the workers and the poor who bear the brunt of the adjustments, despite having had little involvement in the policies that created these vulnerabilities.
### The Opportunity Cost of FX Interventions
Every US$10 million used to stabilize the currency is US$10 million that could have been invested in other sectors of the economy. That same amount could support vocational training programs, rehabilitate schools, equip hospitals, boost local food production, or create employment opportunities for young people. In an economy plagued by high levels of unemployment and underemployment—especially among the youth—these alternatives must be carefully considered.
### Unequal Distribution of Benefits
Another overlooked aspect of FX interventions is the unequal distribution of benefits. Large importing firms, financial institutions, and wealthier consumers stand to benefit most from currency stabilization. However, informal workers, small traders, and rural households often see little immediate benefit. Prices may stabilize temporarily, but their incomes do not rise correspondingly, and social support remains insufficient. Without a deliberate focus on equitable outcomes, such interventions risk exacerbating existing inequalities between the wealthy and the poor, urban and rural populations, and the formal and informal sectors.
### Striving for a Balanced Approach
This is not to suggest that the government and central bank should remain passive in the face of currency instability. A collapse of the cedi would indeed be disastrous, especially for vulnerable households. Targeted, well-managed interventions may be necessary during periods of acute stress. However, these should remain emergency measures—temporary responses to exceptional circumstances, not the cornerstone of long-term economic management.
### The Structural Challenge
The underlying challenge facing Ghana is structural. The economy has been overly reliant on the export of primary commodities and the import of finished goods. This dependency makes the currency vulnerable and places constant pressure on foreign exchange reserves. No amount of short-term intervention can replace the hard work required to diversify exports, add value to raw materials, strengthen domestic manufacturing, and reduce import reliance.
Workers have a direct stake in these reforms. A diversified and productive economy leads to better jobs, improved wages, and increased resilience to external shocks. It also provides a more sustainable foundation for currency stability. In this sense, protecting the cedi and protecting workers should not be seen as competing objectives, but rather as complementary goals.
### The Role of Transparency and Social Dialogue
Transparency and social dialogue are key to navigating this process. Workers, through organized labor, have a legitimate interest in understanding macroeconomic decisions and the trade-offs they involve. Regular engagement between economic managers and labor organizations can help build trust, improve policy design, and ensure that workers' concerns are addressed. Macroeconomic policies should not be the preserve of technocrats alone—they have real consequences for people’s lives.
### Protecting Workers’ Real Incomes
Protecting workers’ real incomes requires complementary wage policies. FX interventions, even when successful, do not automatically guarantee that wages will keep pace with rising costs of living. Wage-setting mechanisms should include cost-of-living adjustments, inflation-linked reviews, and timely renegotiations. Without these, workers remain vulnerable to the fluctuations of macroeconomic policies.
### Conclusion
Ghana’s economic policies should always be judged by their impact on ordinary people. Teachers, cleaners, nurses, artisans, and traders are not mere statistics—they are the backbone of the nation’s economy. Policies that stabilize markets but leave workers struggling to survive cannot be considered a success.
Ghana’s economic challenges are complex, and solutions will require patience and careful planning. However, one principle should be non-negotiable: **economic stability must serve human development, not the other way around.** While currency stability is important, it should never be pursued at the cost of decent work, social justice, or long-term national progress.
If the current period of relative stability in the currency market is used wisely, to invest in productive capacity, enhance public services, and strengthen social protection, the sacrifices made may lead to lasting benefits. If not, we risk repeating the cycle of short-term relief followed by deeper crises.
The choice we face is not just about defending the cedi today, but about building an economy that works for Ghanaian workers today, tomorrow, and for generations to come.
Source: theghanareport.com
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