Ghana’s FX, gold reserve strategy carries high fiscal cost - S&P Global
S&P Global warns that Ghana's strategy to accumulate gold and foreign exchange reserves carries significant fiscal costs that could strain the country's public finances. The report highlights concerns over the Bank of Ghana's operating losses and the impact of currency fluctuations on national debt.
Why it matters
The analysis underscores the risks developing nations face when attempting to stabilize their economies through aggressive reserve accumulation policies.
Accra, Sept. 29, GNA – Ghana’s strategy of accumulating foreign exchange (FX) reserves and gold carries a high fiscal cost that could erode recent improvements in its public finances, S&P Global, an international credit rating agency, has said.
The agency, in a report published on its website on Ghana’s macroeconomic conditions, said although the gold sector was driving reserve accumulation, the implementation of the Ghana Accelerated National Reserve Accumulation Policy (GANRAP) would require the Government to incur significant local currency costs.
The GANRAP seeks to leverage Ghana’s gold resources to strengthen national reserves, support long-term macroeconomic stability, improve confidence in the economy and enhance the country’s capacity to withstand external pressures.
S&P Global estimates that the cost of implementing the programme could amount to between 0.8 per cent and 2.6 per cent of annual Gross Domestic Product (GDP).
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