External sector boom: A turning point for government, industry, and households

By Surv. Prof. Forster SARPONG

In the first quarter of 2025, Ghana recorded a rare but momentous economic milestone, achieving a net lending position to the rest of the world, according to the Bank of Ghana’s May 2025 Monetary Policy Report.

This marked a departure from years of persistent deficits and external vulnerabilities. A combined surplus of $2.2 billion in the current and capital accounts, coupled with a net acquisition of financial assets totalling $2.1 billion, not only signified growing investor confidence and trade dynamism but also repositioned Ghana as an emerging economic force in the region.

But beyond the macroeconomic euphoria lies a deeper story, one that touches every facet of the national ecosystem: from government programs and structural reform to the boardrooms of Corporate Ghana, the corridors of the public service, and the dinner tables of ordinary households. This article explores how Ghana’s strengthened external balances are more than just numbers, they are a signal of renewal, resilience, and readiness.

1. Governmental Initiatives: Policy Credibility and Fiscal Room

The net lending position repositions the Government of Ghana in both the domestic and international arena. Firstly, it boosts Ghana’s creditworthiness, lowering sovereign risk premiums and reducing the cost of borrowing on international capital markets. With the last Eurobond issued in 2021 at a steep 8.875% interest rate, this improved external performance opens the door for more affordable financing in future.

Domestically, the surplus provides greater fiscal space. The government’s Medium-Term Revenue Strategy (2024–2027), which hinges on mobilising non-tax revenues and cutting unproductive expenditures, now benefits from a cushion to shield social sector investments. Programmes under Agenda 111 (health infrastructure) and the YouStart initiative (youth entrepreneurship) could now be accelerated as macroeconomic buffers strengthen.

Moreover, with the International Monetary Fund (IMF) approving Ghana’s second review under the $3 billion Extended Credit Facility (ECF) in April 2025, the BoG’s external sector report provides a compelling case for continued support and possible upward revision in disbursement timelines.

2. Ghana’s Reset Agenda: Laying Foundations for Structural Transformation

The “Ghana Reset Agenda,” launched in 2023 as a response to the economic turbulence of the pandemic and post-IMF reforms, aims to structurally rebalance the economy towards export-led growth, digital transformation, and industrialisation. The $2.2 billion surplus in the current and capital accounts, fueled by export growth in cocoa, gold, and crude oil, as well as remittance inflows confirms that the agenda is beginning to bear fruit.

Significant contributors include:

1. Gold Exports:

Ghana maintained its position as Africa’s top gold producer, exporting $2.9 billion in Q1 2025 alone (Minerals Commission Report, April 2025).

2. Non-Traditional Exports:

Including shea butter, horticultural products, and processed foods, these rose by 18% year-on-year, reflecting gains in the National Export Development Strategy.

3. Remittance Inflows:

A 12% increase in diaspora remittances (from $1.06 billion in Q1 2024 to $1.19 billion in Q1 2025) indicates restored global confidence and a resilient diaspora economy.

This improved external posture gives the Reset Agenda the financial legitimacy and narrative momentum needed to shift from crisis management to growth activation and transformation.

3. Public Sector Growth: Productivity, Investment, and Digital Expansion

The public sector, traditionally burdened by wage bills and inefficiencies, stands to benefit substantially from the improved external sector performance. With external financing risks reduced, the Public Investment Programme (PIP) can be expanded to include infrastructure renewal, digitisation, and public sector capacity development.

This could accelerate implementation of:

1. gov Platform Enhancements – supporting e-revenue collection, which rose by GH₵1.4 billion in Q1 2025 (GRA Quarterly Report).
2. Digital Public Service Delivery – where Ministries, Departments, and Agencies (MDAs) can now adopt cloud infrastructure and biometric systems with enhanced budgetary support.
3. Transport and Utility Modernisation – thanks to improved access to concessional loans and bilateral agreements, such as the Ghana-Germany Green Transition Agreement signed in March 2025.

The macro stability also allows the government to address wage arrears, promote performance-based appraisals, and rationalise personnel to improve service delivery in education, health, and local governance.

4. Corporate Ghana and SMEs: Breathing Space for Growth

For Corporate Ghana, particularly Small and Medium Enterprises (SMEs), the impact of this external sector boom is twofold: stability and affordability.

1. Exchange Rate Stability:

The cedi appreciated by 3.4% against the dollar between January and April 2025, stabilising input costs for firms dependent on imports.

2. Lower Interest Rates:

With declining inflation (from 23.5% in January 2025 to 18.7% in May 2025) and positive external balances, the Bank of Ghana has room to cut the Monetary Policy Rate, currently at 27.5%, potentially lowering commercial lending rates.

3. Access to Capital:

The net acquisition of financial assets suggests stronger capital flows into the private sector. Already, banks such as CalBank and Fidelity Bank have announced new export credit lines and SME financing schemes in April 2025.

This improved climate enables companies to invest in technology, training, and production capacity, especially in priority sectors like agribusiness, fintech, and light manufacturing.

5. Households in Ghana: Relief, Stability, and Renewed Confidence

For the average Ghanaian household, macroeconomic improvements may feel distant, but their effects are real and measurable:

1. Reduced Inflation Pressure: With food price inflation easing (from 28.3% in Dec 2024 to 17.6% in May 2025), households can now plan consumption with more certainty.
2. Employment Opportunities: Industrial stability and renewed public investment create jobs in construction, logistics, and services. The YouStart programme and Ghana Enterprises Agency (GEA) now report over 15,000 new MSME jobs created in Q1 2025.
3. Cedi Strength: A stronger cedi reduces imported inflation, improving purchasing power. For instance, the price of imported rice declined from GH₵680 per 50kg bag in Jan 2025 to GH₵590 in May 2025.

Moreover, remittance recipients, who form nearly 20% of Ghanaian households, now enjoy better transfer rates and increased support for education, health, and housing.

Conclusion: From Surplus to Sustainability

Ghana’s net lending status to the world in Q1 2025 is more than a statistical footnote, it is a signpost of economic resilience and recovery. But the task ahead is to sustain these gains through fiscal discipline, export competitiveness, and inclusive growth.

The opportunity is clear and translate macro success into real sector transformation, fueling government reform, empowering businesses, strengthening the public service, and improving household well-being.

As Ghana recalibrates its trajectory under the Reset Agenda, this external sector breakthrough must serve as a foundation for economic dignity, national confidence, and generational prosperity. The time is now, not just to celebrate a surplus, but to build on it with purpose.