A new policy analysis suggests that Ghana could significantly strengthen its ability to withstand global economic shocks if it implements the proposed Ghana Accelerated National Reserve Accumulation Policy (GANRAP).
The paper, titled “The US–Israel–Iran War and the Strait of Hormuz Threat: How Gold-Backed Reserves Shield Ghana From the Unfolding Crisis,” was authored by Stephen Lartey and Theo Acheampong. It examines how tensions involving the United States, Israel and Iran particularly around the strategically important Strait of Hormuz could affect Ghana’s economy.
To illustrate the potential impact, the researchers compared two possible scenarios: one in which Ghana maintains its current policy direction without GANRAP, and another where the reserve accumulation framework is fully implemented.
If GANRAP Is Not Implemented
Under the status quo scenario, Ghana’s external reserves would remain at about 5.7 months of import cover, leaving the country more exposed to external shocks.
The study projects that a disruption in global energy markets could push Ghana’s oil import bill up by about 39 percent, adding roughly US$1.99 billion to annual costs.
Although higher global gold prices could boost Ghana’s export earnings by an estimated US$1.92 billion, the country would still face a net oil drain of around US$980 million each year.
The analysis indicates that Ghana might still record a current account surplus of about US$756 million monthly, which could partially cushion the shock. However, the Ghanaian cedi could weaken by 5 to 8 percent if the usual link between gold prices and foreign inflows becomes unstable.
Inflation could also rise to between 7 and 8 percent if several external pressures occur at the same time. In such circumstances, the study warns that Ghana may again need support from the International Monetary Fund, with a full economic recovery potentially taking two to three years.
If GANRAP Is Fully Implemented
The study argues that the situation would look very different if GANRAP is adopted.
Under the policy framework, Ghana’s reserves could rise to more than 15 months of import cover, creating a much stronger cushion against global economic disruptions.
Foreign exchange inflows are projected to increase from US$28.3 billion to about US$30.9 billion annually, generating a net positive effect of roughly US$3.53 billion that could absorb external shocks.
Within two years, the country’s import cover could grow further to 16–17 months, supported by stronger gold prices and increased production from artisanal and small-scale mining.
With stronger reserves in place, the researchers believe the cedi would remain relatively stable, while inflation would likely stay within the 5 to 7 percent range.
The study also notes that Ghana would likely avoid returning to the IMF for support, since the policy focuses on building reserves through gold accumulation rather than borrowing through additional bonds.
Building a Strategic Buffer
GANRAP is designed as Ghana’s first comprehensive national framework aimed at rapidly increasing external reserves and strengthening long-term economic stability.
The policy seeks to raise Ghana’s reserves to the equivalent of 15 months of import cover by 2028, a move expected to boost exchange rate stability, improve investor confidence and strengthen the country’s resilience against global economic shocks.
According to the authors, the difference between the two scenarios is substantial.
They argue that policies like GANRAP could shift Ghana from being a country that struggles during global crises to one that is better prepared to absorb external shocks especially those linked to geopolitical tensions and disruptions in global energy markets.
Source: Norvanreport.com
