It observed that the dependence on external borrowing as the means of managing the value of the cedi had been problematic, leading to external debt buildups and servicing difficulties, hence becoming unsustainable.

"Even though, on paper, exports of gold and oil are recorded in the balance of payments as large and growing, a significant part of inflows from them do not come back to Ghana in practice," Dr Said Boakye, the Executive Director, IFS, said at a press conference on Wednesday ahead of the budget reading.

"Even the portion that comes back does not hit the Bank of Ghana's balance sheet for the management of the cedi." "These are the causes of the limited practical effect of the total merchandise export on the value of the cedi."

To demonstrate the negative impact of external borrowing on cedi depreciation, he analysed the average capital and financial account balance with the average depreciation rate of the cedi against the US dollar over a six-year period.

Dr Boakye noted that between 2017 and 2019, the average capital and financial account balance stood at US$2.51 billion while the average depreciation rate of the cedi against the US dollar stood at 8.7 per cent during this period.

"From 2020 to 2021, the depreciation rate of the cedi against the US dollar declined to 4.0 per cent because, driven by increased Eurobond issuance during the period, average capital and financial account balance increased to US$3.1 billion," he said.

"However, in 2022 to 2023, the Government of Ghana was unable to borrow externally due to the downgrade in Ghana's credit rating to junk status in early 2022, turning the capital and financial account into a negative balance of as much as negative US$1.44 billion."

"This is the cause of the dramatic average depreciation of the cedi against the US dollar by 28.9 per cent in 2022 to 2023."

To ensure that the total merchandise exports had significant effect on the appreciation of the cedi, Dr Boakye called for the review of concession agreements with multinational companies in the oil and gold sectors that allowed the companies to have control over export revenues from those commodities.

He urged the government to opt for joint venture arrangements or the use of production sharing agreements to the generation of adequate fiscal revenue for effective fiscal management and directly improve export revenue.