A significant drop in international gold prices, possibly triggered by the US reverting to more traditional trade policies or the resolution of major geopolitical crises, could severely deplete Ghana’s foreign exchange reserves, UK-based research firm Fitch Solutions has cautioned.
In a recent assessment, Fitch projected that such a scenario would place immense pressure on the Bank of Ghana, making it difficult for the central bank to hold the cedi at current levels and potentially triggering another wave of currency depreciation.
“This would keep inflation elevated, lead to a weakening in consumer and investor sentiment and prompt the central bank to keep interest rates higher for longer,” the report noted, outlining its downside risk forecast.
On the flip side, Fitch said a continued appreciation of the cedi beyond current expectations could help ease inflation more quickly than currently projected.
“This would support stronger private consumption and prompt the Bank of Ghana to ease monetary policy more rapidly, which would stimulate credit uptake,” the report stated, highlighting its upside risk outlook.
However, the firm projected that government spending would have a negative contribution to economic growth in 2025 due to ongoing fiscal consolidation under Ghana’s agreement with the International Monetary Fund (IMF).
Despite those fiscal constraints, Fitch observed that a stable and stronger exchange rate—bolstered by high gold prices—could aid the disinflation process, relieve pressure on household budgets, and support consumer spending in the near term.
