Ghana's efforts to accumulate foreign reserves and gold have been warned to carry significant fiscal costs by S&P Global, a US-based rating agency. The agency cautions that these costs could undermine the country's recent improvements in public finances. According to S&P Global, the gold sector is driving the accumulation of reserves, but implementing the Ghana Accelerated National Reserves Accumulation Program (GANRAP) will incur high local currency costs.
The estimated costs of GANRAP could range from 0.8% to 2.6% of Ghana's annual Gross Domestic Product (GDP). Furthermore, S&P Global notes that the Bank of Ghana's balance sheet has deteriorated substantially, with an operating loss of $1.25 billion in 2025. This loss worsened the bank's negative equity to 6.7% of GDP. In response, the government has initiated a phased capital restoration program to recapitalize the central bank, which is expected to last until 2032.
To recapitalize the Bank of Ghana, the government will likely need to issue additional government debt, according to S&P Global. The agency also notes that the government is reforming its regulatory and tax regimes for the gold sector, including transitioning to a dynamic sliding-scale royalty model to reduce fiscal costs. However, S&P Global anticipates that external shocks, such as rising international fuel prices due to the Middle East war, will partially offset the expected fiscal benefits of these changes.
Ghana's inflation rate has decreased significantly in recent years, from a peak of 54.1% in December 2022 to 5% in August 2026. However, prices have started to trend upward in recent months. The country's economy has shown relative resilience to the economic impact of the Middle East war, but rising input costs, largely linked to higher fuel and transport prices, are starting to have an impact.
S&P Global's warning comes as the Ghanaian government continues to implement measures to improve its public finances. The agency's comments also highlight the challenges facing the country's economy, including the need to manage fiscal costs and mitigate the impact of external shocks. In a related development, S&P Global has affirmed Ghana's "B-/B" credit ratings with a stable outlook.
The Ghanaian economy is expected to face continued challenges in the coming months, including rising input costs and potential external shocks. However, the government's efforts to reform its regulatory and tax regimes for the gold sector and recapitalize the Bank of Ghana are seen as positive steps towards improving the country's public finances.
In conclusion, S&P Global's warning on the high fiscal costs of Ghana's foreign reserve and gold accumulation strategy highlights the need for careful management of the country's economy. The government's efforts to implement reforms and mitigate the impact of external shocks will be crucial in determining the country's economic prospects in the coming months.
Key points
- The strategy of accumulating foreign reserves and gold carries high fiscal costs, potentially eroding recent improvements to Ghana's public finances.
- The estimated costs of GANRAP could range from 0.8% to 2.6% of Ghana's annual GDP.
- Ghana's inflation rate has decreased significantly in recent years, from a peak of 54.1% in December 2022 to 5% in August 2026.
