Ghana Business Environment Update

Several global and domestic macroeconomic trends have hit the Ghanaian economy particularly hard, raising strong concerns about inflation and food security, fuel price escalation, and financing conditions.

In his March 24 speech to the public, Ghanaian Minister of Finance Ken Ofori-Atta outlined several urgent developments due to global factors such as COVID, supply chain problems, and the war in Ukraine combined with Ghana’s domestic challenges in collecting sufficient revenue and servicing its external debt. He highlighted concerns that affect consumers and companies such as: rising fuel prices; rising inflation (15.7% in February); exchange rate depreciation (the Ghanaian cedi depreciated 15.6% versus the dollar since the start of 2022); credit rating downgrades; and rising interest rates.  He stressed Ghana imports 5.2 times the value of the proceeds from its crude oil exports, blunting the potentially positive effects of higher oil prices. 

Speaking to the country’s public debt, the Minister reported that provisional data on the stock of debt as at the end of December 2021 showed that it increased to GH¢351.8 billion (80.1 percent of GDP), compared with GH¢218.2 billion (61.2 percent of GDP) at the end of December 10, 2020.  Of the total debt stock, domestic debt was GH¢181.8 billion (51.7 percent), while the external debt was GH¢170.0 billion (48.3 percent), he reported.

To address these challenges, Minister Ofori-Atta announced several austerity measures aimed at reaching a 7.4% budget deficit target.  Many of these measures are significant for international companies doing business in Ghana now or seeking new business opportunities.  They include: an additional 10% across-the-board cut in discretionary spending by Government Ministries on top of a 20% cut previously announced; a moratorium on the government’s purchase of vehicles; and the prioritization of completing ongoing projects over launching new projects; among other measures. 

Regarding government financing and currency measures the Minister reported the Government of Ghana will conclude an external financing arrangement up to US$2 billion in the next 2-6 weeks in line with approved external financing for 2022 and for liability management.  In addition, the Ministry of Finance will work with its Central Bank to review the foreign exchange retention policy to ensure multinational companies in the extractive sectors retain foreign exchange earnings from the sale of mineral resources in the country.

The Minister announced that the government will pursue reforms to address structural challenges in public financial management including procurement and expenditure (commitment) control, payroll management and human resource management.

For more information on the business environment and commercial opportunities in Ghana, contact the Commercial Section at the U.S. Embassy in Accra at office.accra@trade.gov or +233(0)30-274-1870.