Ghana’s reliance on imported fuel, gold exports exposes economy to shocks – Prof Quartey

Economist Professor Peter Quartey has warned that Ghana remains highly vulnerable to external economic shocks due to its dependence on imported fuel and gold exports.

He said the country has limited buffers to cushion the economy from major global disruptions.

Speaking on Joy News’ PM Express Business Edition on Thursday, Prof Quartey said Ghana’s vulnerability is particularly evident in the energy sector.

“Yes, you will notice that, I mean, for these countries that are even fighting, Iran, the U.S., and the rest, they have a buffer,” he said.

“They have oil reserves that they can fall on.”

Ghana, he said, does not have the same level of protection.

“I mean, we basically have very little buffer to fall on, and therefore, when they sneeze, we catch a cold,” Prof Quartey said.

He identified Ghana’s continued dependence on imported processed fuel as a major concern.

“And I think we are not processing enough of the oil,” he said.

“We are an oil producer, but we are not processing quite a good chunk of the oil.”

According to Prof Quartey, Ghana’s continued importation of processed fuel leaves the economy exposed to changes in international conditions.

“We still continue to import processed fuel, and that is a big problem for us,” he said.

He also pointed to Ghana’s heavy reliance on conventional fuels.

“Secondly, we’re relying too much on fuel, petrol and, you know, crude, for instance, whereas in other countries, other forms of fuel, green energy, green transition is happening rapidly,” he said.

He said the slow pace of the transition to other energy sources further increases Ghana’s vulnerability.

“That is not happening so much with us, and I think that makes us very vulnerable to external shocks,” Prof Quartey said.

The economist also raised concerns about the structure of Ghana’s export earnings.

He said gold currently accounts for about 60% of the country’s export earnings.

“And if you even look at our exports, for instance, at the moment, gold accounts for almost 60% or 61% of our export earnings,” he said.

Prof Quartey warned that such concentration could expose Ghana to significant risks if conditions in the international gold market deteriorate.

“That puts you in a very vulnerable situation,” he said.

“Should gold prices tumble, or should anything happen to the international market, we are likely to suffer the consequences.”

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.