Ghana’s financial regulators are currently reassessing restrictions that limit pension fund investments in offshore assets. These measures were initially imposed by the National Pensions Regulatory Authority (NPRA) to conserve foreign exchange during the country’s debt restructuring process.
Nana Akua Asare, the NPRA’s spokesperson, explained that pension funds were required to seek authorization before purchasing foreign assets as a way to stabilize the local currency and protect foreign reserves. The NPRA is now conducting a review to determine under what conditions these offshore investments may be permitted moving forward.
Ghanaian law allows private pension funds to allocate up to 5% of their assets to foreign investments. As of the end of the first quarter of 2024, pension fund assets amounted to 71 billion cedis ($4.5 billion), with over 50 billion cedis managed by private schemes, according to the NPRA’s website.
The restrictions were introduced as part of Ghana’s broader economic response after it began restructuring nearly all its debt in early 2023, in collaboration with the International Monetary Fund (IMF). The debt crisis led to a dollar shortage, cutting off access to international capital markets and forcing the government to take steps to boost foreign exchange supply domestically.
The cedi has experienced significant depreciation, losing 25% of its value against the U.S. dollar this year, following a 15% decline in 2023. However, the currency has recently shown signs of recovery, gaining 0.2% to 15.9 per dollar—the strongest level in over five weeks—thanks to increased gold production, which allowed the central bank to inject more dollars into the market.
This review of pension fund investment restrictions is part of ongoing efforts by the government to navigate its economic challenges while balancing the need to attract foreign investment and maintain currency stability.
