Strategy of accumulating foreign reserves, gold carries high fiscal cost – S&P Global
According to the US-based rating agency, although the gold sector is fueling the accumulation of reserves, implementing Ghana Accelerated National Reserves Accumulation Program (GANRAP) will cause the government to incur high local currency costs.
S&P Global has cautioned that Ghana's efforts to accumulate both foreign reserves and gold come with a significant fiscal burden, which could undermine recent progress in the country's public finances. While the gold sector is contributing to reserve accumulation, implementing the Ghana Accelerated National Reserves Accumulation Program (GANRAP) will require the government to incur substantial local currency costs, potentially ranging from 0.8% to 2.6% of annual Gross Domestic Product (GDP).
The Bank of Ghana's balance sheet has deteriorated, with an operating loss of $1.25 billion in 2025, which has worsened negative equity to 6.7% of GDP. Despite the government's phased capital restoration program planned until 2032, S&P Global anticipates this may necessitate additional government debt. The agency notes that Ghana is refining its regulatory and tax regimes for the gold sector, including a shift to a dynamic sliding-scale royalty model to cut fiscal costs, yet external shocks, like rising fuel prices due to the Middle East conflict, could partially offset the anticipated fiscal benefits.
Inflation has plummeted to 5% in August 2026 from a peak of 54.1% in December 2022, but prices are beginning to rise again. The Ghanaian economy appears resilient to the economic effects of the Middle East conflict, although escalating input costs, largely due to higher fuel and transport prices, are starting to take hold.
Written by urgent.news from MyJoyOnline Ghana's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
