Editorial: Middle-East tensions pose significant external threat to local economy

S&P global ratings agency has affirmed the country’s stronger economic growth and rising export volumes, particularly from gold, have supported a significant build-up of foreign currency reserves and helped to stabilise the country’s external position.

The ratings agency also notes that recent fiscal reforms and tighter expenditure controls are expected to keep budget deficits more contained than in the period leading up to the country’s debt crisis during late 2022.

However, in view of the ongoing Middle-East crisis, S&P has cautioned that Ghana remains vulnerable to global shocks. Ongoing tensions in the Middle-East could drive up fuel and transport costs and in turn push inflation higher.

Such developments could increase government borrowing costs and weigh on investor confidence. The agency also pointed to ongoing challenges including high debt servicing costs, which are projected to consume a significant share of government revenue in the coming years.

Indeed, S&P believes that while inflation has eased significantly from recent highs, it is expected to rise moderately in 2026 due to external pressures.

The agency says Ghana’s rating could be upgraded if  government maintains fiscal discipline, reduces debt servicing burdens and strengthens its external buffers. Ghana’s sovereign credit rating has been affirmed at ‘B-/B’ with a stable outlook, reflecting improving economic conditions alongside persistent fiscal and external risks.

It however warned that any slowdown in reforms, renewed fiscal slippage, or setbacks in the debt restructuring process could put downward pressure on the rating.

As B&FT goes to press, an emergency Cabinet meeting is being held to address the sharp rise in fuel prices, which has been triggered by the ongoing conflict in Iran and the broader Middle-East region.

Fuel prices surged significantly effective April 1, 2026 following an escalation of the Iran conflict, which has driven global crude oil prices sharply higher. Although the relatively stable Ghanaian cedi has helped moderate the impact, these increases have raised concerns about higher transportation costs and inflation.

Meanwhile, global  oil prices fell and stock markets have jumped after the US and Iran agreed to a conditional two-week ceasefire deal that includes reopening the key Strait of Hormuz waterway.

As we await the outcome of Cabinet’s emergency meeting, some remain hopeful that this deal will further de-escalate tensions and the uncertainty will abate.