President John Mahama is pressing forward with an ambitious Economic Reset Strategy aimed at stabilising Ghana’s economy and completing its IMF programme by 2026. Progress has been steady. The budget deficit, once 7.9%, has dropped to 4.9%. Inflation, which ended last year at 23.8%, has eased to 18.5% by May. Even the cedi, long under pressure, is showing signs of stability, trading at around GHS10 to the dollar.
These improvements mark a cautious return to economic normalcy. But just as momentum begins to build, an unexpected complication is emerging: the escalating war between Israel and Iran. Though unfolding far from Accra, the conflict is beginning to exert quiet pressure on Ghana’s recovery, reminding observers how deeply interconnected the global economy has become.
Higher global oil prices are the first ripple. On paper, rising crude prices could boost Ghana’s oil revenue. In reality, because the country imports most of its refined fuel, domestic fuel prices are likely to climb. That spells potential increases in transport fares and food costs, and may push the government toward renewed spending on fuel subsidies. Missing fiscal targets at this stage could delay the upcoming IMF review in June, a critical milestone for Ghana’s exit strategy from the programme. Investor confidence, which the administration has worked hard to rebuild, could be shaken by any setback.
Mahama’s broader recovery plan, especially his eight-point strategy to restore trust and reopen access to global capital markets, now faces fresh uncertainty. Conflict in the Middle East has triggered caution among global investors. Funds once destined for frontier markets may be rerouted to safer havens. Ghana risks being temporarily sidelined just as it begins regaining international attention.
Local plans are also under pressure. The 24-Hour Economy Initiative, designed to create jobs and boost productivity through round-the-clock operations, relies heavily on stable energy, affordable fuel, and reliable transport. With energy inputs climbing and Gulf shipping disruptions driving up costs, businesses, particularly small and medium-sized ones, may find it harder to sustain extended working hours.
The country’s push for export-led growth could slow as well. Ghana is targeting $10 billion in non-traditional exports by 2030. But shipping routes, especially through the Suez Canal, are becoming more expensive and uncertain. Exporters may face longer delays and higher costs. And if global demand weakens, Ghanaian goods, especially perishables and bulky items, could meet reduced interest in international markets.
Currency and debt management, another cornerstone of the economic reset, could also come under strain. Ghana recently secured credit rating upgrades from Fitch and S&P, a symbolic victory signaling renewed belief in the country’s direction. Yet that confidence is fragile. A jittery global market could trigger capital flight from riskier economies like Ghana. The cedi might lose ground, borrowing costs could rise, and debt restructuring timelines may be disrupted, threatening to reopen old wounds in public finance.
Even in the power sector, where Mahama has pledged to clear $2.5 billion owed to Independent Power Producers by year-end, progress could be threatened. Rising costs of fuel and potential revenue gaps could slow reform plans, especially if renegotiated contracts and improved billing systems can’t keep up with inflation. Should electricity prices rise, resistance from the public may further complicate recovery efforts.
Structural reforms, including tax policy changes, procurement restructuring, and public finance law revisions, are also at risk of losing momentum. With donor attention potentially diverted toward humanitarian priorities elsewhere, and with domestic pressures mounting, Mahama’s team may have to make tough trade-offs between urgent needs and long-term goals.
Support for SMEs and youth employment could face headwinds. Though Mahama has revived programmes like “Jobs for Youth” and prioritised access to credit, the private sector often pulls back in times of global uncertainty. Investors hesitate, lenders become cautious, and small businesses already burdened by inflation may struggle to stay afloat, let alone grow or hire.
Even gold, one of Ghana’s economic backbones, offers no guaranteed refuge. The government is trying to formalise the sector with the Ghana Gold Board and a clampdown on foreign involvement in artisanal mining. But as gold prices rise due to global tensions, illegal mining becomes more profitable. This could make enforcement harder and tempt more players into unregulated spaces, complicating national reform efforts.
It’s been just over 100 days since Mahama returned to office, and the results so far are noteworthy. Growth reached 5.3% in the first quarter of 2025. Debt-to-GDP is improving. The IMF programme remains on track. Still, the Israel-Iran war has become an uninvited test, a challenge no one anticipated but one that could define the resilience of Ghana’s economic path forward.
