Professional services firm Deloitte has cautioned the Government of Ghana to brace for the impact of emerging geo-political risks in Europe, America, and Russia, warning that potential trade wars could adversely affect the country’s economic stability.
In its analysis of Ghana’s 2025 budget statement, Deloitte recommended that the government adopt measures to cushion the economy against these global uncertainties, particularly in terms of pricing developments.
Deloitte acknowledged policy interventions aimed at mitigating foreign exchange (FX) risks, such as the establishment of the Gold Board (GoldBod), intensified forward FX auctions, reduced public spending, and prioritizing import substitution.
However, the firm flagged declining cocoa production as a major issue, urging immediate action to help boost forex reserves and ease FX demand pressures.
The Ghana cedi depreciated by 19.2%, 17.8%, and 13.7% against the Dollar, Pound, and Euro, respectively, by the end of December 2024. To stabilize the currency, the government outlined several measures, including enhancing forex generation through the GoldBod, intensifying FX auctions, and ramping up domestic production to reduce import reliance.
Inflation remains a pressing concern, having risen from 23.2% at the end of 2023 to 23.8% in December 2024 — surpassing both the budget target of 15% and the IMF’s central target of 18%. Food inflation was identified as the primary driver.
The government has set a 2025 inflation target of 11.9%, with strategies focusing on increasing food production through the Agriculture for Economic Transformation Agenda and targeting large items in the inflation basket like transportation and utilities.
Debt Sustainability and Credit Ratings
On the debt front, Deloitte projected higher credit ratings for Ghana, citing improved debt sustainability. The country’s debt-to-GDP ratio declined from 78.5% in December 2021 to 61.8% in December 2024, reflecting notable progress toward the medium-term target of 55% by 2028, as agreed with the International Monetary Fund (IMF).
Notably, Moody’s and Fitch upgraded Ghana’s long-term foreign and local currency ratings in October 2024, following a 37% reduction in the principal amount of Eurobond components as part of the country’s debt restructuring program. The restructuring is currently about 93% complete.
Deloitte commended the government’s strategy to extend bond maturity profiles and improve the secondary bonds market, which is expected to create fiscal breathing space and mitigate refinancing risks. Plans to leverage the sinking fund to build cash buffers for debt repayment were also highlighted as prudent debt management.
The firm further praised the government’s recent decision to reject Treasury bill auction offers above designated thresholds, resulting in a drop in T-bill rates — a sign of fiscal discipline.
Deloitte, however, urged closer coordination between the Finance Ministry and the Central Bank to align fiscal and monetary policy objectives effectively.
Deloitte expects Ghana’s economic outlook to improve, driven by better debt sustainability, increased investor confidence, and stronger FX liquidity from IMF and World Bank inflows.
However, the firm stressed the importance of maintaining fiscal discipline and enhancing local production to build resilience against global shocks.
