Despite the encouraging signs of recovery, global ratings agency S&P Global Ratings is casting doubt on the resilience of Ghana’s economy.
In its latest upgrade of Ghana’s economy, the S&P credit ratings agency warned that Ghana’s recovery, while impressive in recent months, could prove fragile because the country remains too dependent on global commodity prices.
S&P observes that the current economic performance of Ghana is at the mercy of gold and cocoa, which have recorded prices in recent months.
S&P said that although Ghana’s economic performance has strengthened and inflation has fallen, the country’s resilience is still “highly exposed to risks from commodity price fluctuations and broader external and weather-related shocks.”
Simply put, Ghana’s recent economic progress could easily unravel if global market conditions turn unfavorable.
A Country Still at the Mercy of Gold and Cocoa Prices
Gold, cocoa, and crude oil together account for over 60% of Ghana’s export earnings, making the economy heavily reliant on how these commodities perform on the world market. As has been recorded recently, when prices are high, Ghana’s cedi stabilizes through reserve build-up and an increase in government revenues.
But when prices fall, the opposite happens as the cedi weakens, inflation rises, and government finances come under strain.
The past year has been kind to Ghana as gold prices have stayed near record highs, and cocoa has enjoyed a good rally due to global shortages. These have helped the cedi strengthen by about 30% against the U.S. dollar and boosted the country’s foreign reserves to nearly $11 billion by late 2025.
But S&P warns that this good fortune puts the economy at risk since a downturn in the prices of the commodities means Ghana will take a severe hit.
Weather and External Shocks Still Pose Threats
In addition, Ghana’s agricultural base, S&P says, adds another layer of vulnerability. A significant portion of the country’s GDP still comes from farming, meaning poor rains, floods, or pest infestations could have a direct impact on food supplies, cocoa output, and ultimately, export revenues.
A bad farming season would not only reduce income for thousands of farmers but could also drive up food prices and threaten the government’s inflation targets, which currently aim to stay below 10%.
Similarly, global uncertainties, from energy price swings to geopolitical tensions, could also affect Ghana’s trade and fiscal stability.
“In our view, notwithstanding stronger recent economic outturns, Ghana’s economy remains exposed to risks from commodity price fluctuations and broader external and weather-related shocks,” S&P noted.
Fiscal Reforms Face an Election-Year Test
Beyond external risks, S&P also questioned whether Ghana’s new fiscal reforms will hold up during future election cycles. The agency noted that while the current government has introduced new rules to prevent overspending, these measures remain “nascent,” implying they have not yet been tested under political pressure.
Historically, Ghana’s election years have been marked by big jumps in public spending, often leading to budget overruns, higher debt, and inflation. If that pattern repeats, S&P warns, it could derail the government’s goal of maintaining a primary surplus and keeping debt on a sustainable path.
“We also consider that the effectiveness of nascent fiscal reforms is yet to be tested, especially during future election cycles, which in the past have coincided with large increases in public spending in Ghana,” S&P feared.
Why It Matters to Ordinary Ghanaians
S&P’s warning re-echoes the sentiments of many local and international analysts and economists who are worried about how much of Ghana’s economic stability depends on factors outside the country’s control.
A drop in gold prices could reduce government revenues for roads, hospitals, and schools, while a poor cocoa harvest could cut farmers’ incomes and slow rural development.
It also means the current calm, with lower levels of inflation and a stronger cedi, could prove temporary if the global winds shift.
This indication from the ratings agency maintains that Ghana has made progress, but its recovery remains vulnerable.
To build lasting resilience, the country must diversify its economy beyond commodities and prove that its new fiscal rules can withstand political cycles.
