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

Ghana's strategy of accumulating both foreign reserves and gold carries a high fiscal cost, which could erode the recent improvements to its public finances, S&P Global has warned.

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.

It estimates that these could amount to 0.8%-2.6% of annual Gross Domestic Product.

Furthermore, it said the Bank of Ghana's balance sheet has substantially deteriorated with an operating loss of $1.25 billion in 2025, which worsened its negative equity to 6.7% of GDP.

Although the government has initiated a phased capital restoration programme to recapitalise the central bank that will last until 2032, S&P said doing so will likely require it to issue additional government debt.

“The government is reforming its regulatory and tax regimes for the gold sector. For example, it is transitioning to a dynamic sliding-scale royalty model, to reduce fiscal costs. However, we anticipate that external shocks, such as the rise in international fuel prices stemming from the Middle East war, will partially offset the expected fiscal benefits of these changes”.

It continued that inflation has dropped sharply in recent years, to 5% in August 2026 from a peak of 54.1% in December 2022. Nevertheless, prices have started to trend upward in recent months.

It also mentioned that the Ghanaian economy is demonstrating relative resilience to the economic impact of the Middle East war, although rising input costs, largely linked to higher fuel and transport prices, are starting to have an impact.

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