Ghana’s Fiscal Reforms Untested, S&P Warns

Ghana’s economic recovery story is gaining international attention, but caution remains the dominant tone in the latest assessment by S&P Global Ratings.

While macroeconomic reforms and fiscal consolidation efforts are beginning to yield results, the agency warns that these gains have not yet been fully tested across economic and electoral cycles.

The report paints a picture of an economy on the mend, supported by strong export performance, improving investor confidence, and a stable macroeconomic environment. However, it also highlights persistent vulnerabilities that could derail progress if not carefully managed.

Key Sectors

Ghana has recorded a strong rebound, with real GDP growth reaching 6 percent in 2025. This expansion has been largely broad-based, reflecting improving consumer confidence, a more stable currency, and declining inflation.

The outlook remains positive, with S&P projecting average growth of 5.5 percent annually through 2029. This trajectory is supported by strong performance in the gold sector, where rising global prices have boosted export revenues and strengthened external reserves.

A key policy intervention has been the formalization of the gold trade through the Ghana Gold Board, which has helped channel production from small-scale miners into official export streams. This has significantly increased export volumes and enhanced revenue mobilization.

“We forecast real GDP growth of 5.5% per year on average through to end-2029, supported by strong gold exports, and still-favorable terms of trade” S&P made it known.

Policy Anchor

Ghana’s reform agenda continues to be guided by its programme with the International Monetary Fund, which is set to expire in May 2026. The programme has played a critical role in restoring macroeconomic stability and enforcing fiscal discipline following the country’s debt crisis.

Authorities have reintroduced fiscal rules, including a debt ceiling and a primary surplus target, alongside the establishment of an independent fiscal council to strengthen oversight. “Policy remains underpinned by an IMF program, which expires in May 2026,” it said.

Despite these efforts, S&P highlights the risk that fiscal discipline could weaken once the programme ends, particularly given Ghana’s historical pattern of increased spending during election cycles.

Fiscal Risks

Although Ghana’s fiscal position has improved significantly, vulnerabilities remain. The government is expected to maintain a tighter fiscal stance compared to previous years, but rising capital expenditure could introduce new pressures.

“Although we anticipate government policy will remain focused on rebuilding fiscal headroom after program slippages, fiscal policy could loosen.”

S&P forecasts that the fiscal deficit will narrow compared to past levels, but warns that increased spending, particularly on infrastructure, may widen the gap in the near term. At the same time, debt servicing continues to absorb a substantial portion of government revenue, limiting fiscal flexibility.

State-owned enterprises also present ongoing risks, especially in the energy sector, where legacy debts and inefficiencies continue to strain public finances.

Beyond domestic challenges, Ghana faces growing risks from external shocks. The ongoing conflict in the Middle East is expected to have ripple effects on global fuel and shipping costs, which could translate into higher inflation domestically.

As a net oil importer, Ghana remains exposed to rising energy prices despite its own crude oil production. These developments could erode purchasing power and dampen investor confidence. “On balance, we expect the ongoing conflict in the Middle East to weaken Ghana’s economy,” it said.

In addition, Ghana’s trade exposure to the Middle East, particularly through gold exports to the United Arab Emirates, adds another layer of vulnerability to geopolitical disruptions.

Ghana has made notable progress in restoring macroeconomic stability. Inflation has dropped sharply to single digits, while the cedi has strengthened significantly from its previous lows. Interest rates have also declined, easing borrowing costs and supporting economic activity.

However, structural challenges persist. A large share of public debt remains denominated in foreign currency, exposing the country to exchange rate risks. Furthermore, Ghana’s history of repeated IMF programmes and debt restructurings underscores the difficulty of sustaining long-term fiscal discipline.

Reforms

S&P’s assessment ultimately underscores a central concern. While Ghana’s reforms are commendable, their effectiveness has yet to be proven under the pressures of economic downturns and electoral cycles.

The country’s track record suggests that maintaining fiscal discipline during politically sensitive periods remains a significant challenge. As the IMF programme draws to a close, Ghana will need to demonstrate that its reforms can withstand these tests without external support.