Our views and highlights from the Board approval statement 

• Steering the Ship to Steady State: IMF Backs the BOG Course. The Bank of Ghana’s recent hawkish tilt which has triggered a rapid disinflation so far in 2025 (-10.1pp YTD to 13.7% in June 2025) did not go unnoticed by the IMF Board. The Fund equally acknowledged the “successful” rebuilding of international reserves which it noted has “far exceeded” the programme target. We note that net international reserves stood at 3.7 months of import cover as of April 2025 (already exceeding the 2026 target of 3.0 months cover). In our view, the renewed and decisive progress towards price stability was a strong argument in favour of Ghana’s case to secure the Board approval. The latest indications we picked from the Ghanaian authorities (which will be confirmed by the MPC) suggest that Gross International Reserves likely climbed above 5.0 months of import cover (vs 4.0 months at end-2024). This provides significant anchor for continued stability of the Ghanaian Cedi, fanning the disinflation flame and supporting the authorities’ measures toward debt sustainability.

  The Fund noted that the BOG has implemented risk containment measures to support banking system stability, including escalated measures to recapitalize under-capitalized banks, reduce Non-Performing Loans (NPLs), and ensure effective governance. We note recent directive by the Bank of Ghana which sets a new prudential limit on NPL ratios at a maximum 10.0% for Regulated Financial Institutions with effect from December 2026. Additionally, the BOG has also constituted a committee to review the Ghana Reference Rate with the objective to overhaul its computation and support lower lending rates (below historical average) by end-2028. We think the renewed commitment to financial sector reforms and stability received the seal of approval from the IMF and strengthened the authorities’ case for approval.

• IMF Recommendation to the BOG: Stay Appropriately Tight, Step Back from the FX Frontline. Although the IMF applauded the Bank of Ghana’s measures to steady price levels and exchange rate, we think the Board appeared concerned about continued strong FX market interventions by the BOG. Our estimate showed year-to-date FX sale of USD 4.6bn on the interbank market by the BOG as of 7 July 2025, while concurrently accumulating FX reserves, through a strategic tweak to the domestic gold purchase programme. This appears to have created a significant divergence between the interbank rate at 10.35/USD and retail market levels above 12.0/USD, with the latter closer to our estimated fair value of GHS 12.2/USD.  Unsurprisingly, the IMF proposed a reduction in the BOG’s FX market footprint, allowing for “greater exchange rate flexibility” and adopting an internal FX intervention policy framework. In view of this recommendation, we think the BOG’s decision to lengthen the FX delivery tenor from 2-day Forwards to 7-day Forwards since 11 June 2025 was to partly align with the Fund’s proposal. We also expect enhanced price discovery in the months ahead as the FX market rates are allowed to converge. While we continue to expect the interbank USDGHS rate to close FY2025 below our estimated fair value, we reiterate the possibility for the interbank levels to steadily rise towards our revised FY2025 midpoint forecast of 10.95/USD with the forecast ceiling at 11.45/USD.