A newly released International Monetary Fund (IMF) report says Ghana’s economic stability is sensitive to fluctuations in global gold prices.
The analysis underscored that the country’s macroeconomic outlook is highly sensitive to changes in gold prices and ensuing exchange rate movements, given that gold is Ghana’s largest export and main source of foreign exchange.
The IMF’s detailed Risk Assessment Matrix revealed landscape where external shocks and domestic vulnerabilities intersect.
A specific adverse scenario analysis suggests that a potential drop in gold prices of about 30 percent by end-2026 which could see prices fall to around US$2,820 per ounce would significantly lower gold exports, reduce foreign exchange inflows, and weaken the cedi and reserve adequacy.
The IMF staff estimated that foreign exchange reserve coverage in 2026 could decline by 1.1 months of imports compared to the baseline.
This drop would also weaken the Bank of Ghana’s balance sheet due to its large share of FX reserves held in gold assets.
It said intensifying geopolitical tensions, escalating global trade measures, and commodity price volatility could spark price swings, re-ignite inflation, and severely hamper growth by eroding investor confidence.
The IMF said financial market volatility in major economies also posed a high risk, potentially worsening the domestic fallout from the recent debt restructuring on the banking sector and impairing banks’ ability to lend.
The IMF also flagged critical internal dangers.
It noted delays in concluding debt restructuring negotiations were marked as a high-impact risk, threatening to further deplete reserves, trigger sharp cedi depreciation, and fuel inflation.
It said domestic fiscal slippages from the agreed path under the $3 billion Extended Credit Facility programme carry a high likelihood and would widen budget deficits, question debt sustainability, and place the exchange rate under severe strain.
The Bretton Wood Institution said rising social discontent, driven by the high cost of living, presents another medium-term threat that could slow down critical reforms.
To navigate these multifaceted risks, the IMF outlined a comprehensive policy prescription.
The IMF urged the central bank to strengthen FX reserve buffers and allow exchange rate flexibility while ensuring orderly market conditions.
It also advised the Bank of Ghana to hedge its reserve assets against market risk, including exposure to gold price movements.
It advised Ghana to deepen structural reforms to boost domestic production, diversify the economy, and improve the business environment to reduce import dependency.
Source: GNA
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