Strategy of accumulating foreign reserves, gold carries high fiscal cost – S&P Global

S&P Global has cautioned that Ghana's pursuit of accumulating both foreign reserves and gold comes with a significant fiscal cost, which could undermine recent advancements in the country's public finances. The gold sector is contributing to reserve accumulation, but implementing the Ghana Accelerated National Reserves Accumulation Program (GANRAP) will lead to substantial local currency expenses. S&P estimates these costs to range between 0.8%-2.6% of the country's annual Gross Domestic Product (GDP).

Moreover, the Bank of Ghana's balance sheet has deteriorated considerably, with an operating loss of $1.25 billion in 2025, which has further exacerbated its negative equity to 6.7% of GDP. Despite initiating a phased capital restoration program to recapitalize the central bank until 2032, S&P believes it may necessitate additional government debt issuance.

Ghana has been 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 predicts that external shocks, such as the surge in international fuel prices due to the Middle East conflict, will partially offset the anticipated fiscal benefits.

Inflation has experienced a sharp decline in recent years, falling to 5% in August 2026 from its peak of 54.1% in December 2022. However, prices have begun to rise again. The Ghanaian economy is showing relative resilience to the economic impact of the Middle East conflict, although rising input costs, primarily driven by higher fuel and transport prices, are starting to affect the economy.