Our views on the implications of the Middle East conflict for Ghana macro risk and the likely policy options.
- Exchange rate will benefit from gold’s resilience but oil price shocks will elevate energy import bill: The oil price shocks present a risk of escalation in Ghana’s oil import bill, which stood at USD 5.1bn at an average price of USD 68.2pb in FY2025. Assuming the same import volumes at an average price of USD 100pb, our estimates suggest that Ghana’s oil import bill could rise by USD 2.4bn in FY2026. We performed a similar operation for gold earnings, assuming an average realised price of USD 4,500/oz, and obtained additional gold inflow of USD 6.5bn in FY2026. We thus infer that while the oil price shocks will spike Ghana’s energy import bill, the earnings from gold provide more than enough buffer to absorb the shock to the external account balances. This should limit the negative impact from the oil price shocks to the exchange rate in 2026.
- Inflation risk heightens from the higher oil prices but remains contained near-term. The main downside risk we perceive from the Middle East conflict is an inflation shock transmitted through higher domestic fuel prices. Energy prices already exceed year-ago levels, heightening Ghana’s inflation risks. Excluding the oil price shock, we estimate end-2026 inflation at 7.5% ±1.0pp. However, we retain our 9.6% ±1.0pp forecast for now, allowing room to assess the evolving risks and policy responses.
- Monetary policy will likely become less dovish and more cautious in the immediate term. The monetary authorities have demonstrated strong commitment to price stability through aggressive liquidity sterilisation and FX management. Despite cutting rates since July 2025, the MPC maintains a double-digit real policy rate (currently at 12.2%), signalling a still-tight stance. Although this leaves room for a 100–200bps rate cut (as earlier called), we now expect the MPC to stay on hold at the March meeting amid the rising inflation risks.
Uncovering the policy options
We believe the Ghanaian authorities command a number of policy options within reach that can be deployed to partly mitigate the oil price shocks in the event of excessive elevation of the inflation profile.
- We envisage that Ghana could leverage higher oil prices to turn budget shortfalls into windfalls, helping shield domestic fuel prices. Also, we believe resilient gold earnings allow the authorities to deploy special FX auctions for bulk oil distributors, limiting price shocks without triggering broad Cedi appreciation. Additionally, we think partial or full suspension of the GHS1.0/litre fuel levy amid the windfalls from mineral royalties could further curb fuel price escalation and limit elevation in the inflation profile.