A comparative analysis of Ghana’s economic vulnerability from the Russia–Ukraine shock to the current Gulf crisis Ghana entered 2026 in the best macroeconomic shape it had seen in years. Inflation had fallen to 3.8 percent in January the lowest level since the country’s consumer price index was rebased in 2021, and a world away from the 54.1 percent peak recorded in December 2022.
The cedi had appreciated by more than 28 percent against the US dollar over the course of 2025. Gross international reserves had climbed to $13.8 billion, equivalent to 5.7 months of import cover. Minister of Finance, Dr Cassiel Ato Forson wants to increase international reserves to the import cover to the equivalent of about 15 months imoport cover by 2028.
Debt restructuring, once a distant ambition, was essentially complete and being religiously followed. The government even paid its liability in December ahead of schedule and indicates in February 2026 that the country is no more “barred from issuing domestic bonds”.
Then came the missiles.
On February 28, 2026, US and Israeli forces launched joint strikes on Iran. Tehran responded with a sweeping wave of drone and missile attacks across the Gulf, targeting energy infrastructure, shipping corridors, and military assets in Saudi Arabia, the UAE, Qatar, Bahrain, and Oman. The Strait of Hormuz through which roughly a fifth of the world’s oil and a significant share of its liquefied natural gas passes has ground to a near-halt.
For Ghana, a country that has spent three years clawing back from economic crisis, the timing could hardly be worse. The question facing policymakers, businesses, and households is not whether this conflict will affect Ghana. It already is. The question is how deep the damage will run and whether the resilience Ghana has rebuilt will prove durable enough to absorb it.
From Crisis to Recovery: Ghana’s Economic Journey Since 2022
To understand what is now at stake, it is necessary to understand how far our country has come.
The Russia–Ukraine war in February 2022 arrived at a moment of profound domestic vulnerability. Global oil prices surged toward $140 per barrel. Sanctions on Russia one of the world’s largest oil and gas exporters sent shockwaves through commodity markets.
For Ghana, the consequences were devastating: inflation crossed 50 percent reaching a peak of 54.1% by December 2022, the cedi collapsed in value, fuel prices surged, transport costs spiked, and food became increasingly unaffordable for millions of households.
The shock exposed deep structural weaknesses. Although Ghana produces crude oil, it imports the bulk of its refined petroleum products meaning that rising global prices translated directly into higher costs at the pump rather than windfall gains in the treasury. Russia and Ukraine’s combined dominance in wheat and fertiliser exports compounded the food price crisis.
Most households take breakfast with bread/wheat component. By the end of 2022, Ghana had defaulted on most of its external debt and was negotiating an emergency $3 billion bailout from the International Monetary Fund.
“Inflation peaked at 54.1% in December 2022. The cedi lost over 50% of its value that year. Ghana defaulted on external debt for the first time in a generation”
The recovery that followed was painful but real. Under the IMF’s Extended Credit Facility, Ghana implemented a programme of fiscal consolidation, monetary tightening, and structural reform. The Bank of Ghana raised interest rates aggressively to anchor inflation expectations.
The then Nana Akufo Addo government restructured Ghana’s domestic debt (famously referred to as haircut) and negotiated Eurobond exchanges with creditor participation exceeding 95 percent.
The Ghana Gold Board (GoldBod), established as a an upgrade of the then Precious Minerals Marketing Company (PPMC) under the new President John Mahama’s government, to channel artisanal gold exports through official channels, generated over $10 billion in foreign exchange earnings in 2025 alone, shoring up reserves and supporting the cedi.
The cedi’s remarkable rally in 2025 broke a three-decade pattern of annual depreciation, marking the currency’s strongest yearly performance in the 4th republican economic history.
The results, by early 2026, were striking. Ghana closed 2025 with a budget deficit of just 1.0 percent of GDP well below its 2.8 percent target and a primary surplus of 2.6 percent of GDP. The Bank of Ghana cut its benchmark interest rate by a cumulative 12.5 percentage points between July 2025 and January 2026, reflecting confidence that inflation had been tamed.
The debt-to-GDP ratio fell from 88 percent at the height of the crisis to approximately 53 percent by mid-2025. President Mahama, in his 2026 State of the Nation Address which was delivered on February 27, declared 2025 a “year of stabilisation” and framed the IMF exit, due by August 2026 , as a national milestone.
Reaction to the President’s State of the Nation Aaddress was largely positive, though minority MPs dissented pointing to the worsening conditions facing cocoa farmers and high utility tarifss. The collapse in global cocoa prices has forced Cocobod to reduce the guaranteed farmgate price per 64kg bag, cutting into the incomes of smallholder farmers who had little cushion to absorb the blow.
It is a stark reminder that macroeconomic recovery, however genuine, does not reach every Ghanaian at the same time or in the same measure.
Two days later, the Gulf went to war.
The Gulf Crisis: What Is Actually Happening
The conflict unfolding in the Gulf is not a distant risk premium. It is an active supply shock with real infrastructure damage and no clear resolution timeline.
The attack on Saudi Aramco’s Ras Tanura complex is the centrepiece. Ras Tanura is one of the world’s largest refineries, processing about 550,000 barrels per day, and serves as a critical export hub for Saudi crude bound for Asia, Europe, and the Americas.
Iranian drones struck the facility, triggering a fire and forcing a production shutdown. Satellite imagery has confirmed structural damage burn scars, impact zones, and compromised infrastructure sections. The Juaymah liquefied petroleum gas terminal, one of the world’s largest exporters of natural gas liquids, has also been disrupted.
Qatar suspended liquefied natural gas production after attacks on facilities at Ras Laffan and Mesaieed a development of global significance given that Qatar accounts for nearly 20 percent of world LNG exports. European natural gas prices surged more than 50 percent in immediate response.
The Strait of Hormuz – the narrow chokepoint through which around 21 percent of global oil trade and 20 percent of global LNG passes has effectively stalled. An Iranian Revolutionary Guard commander declared the strait “closed.” At least five tankers have been damaged, two mariners killed, and approximately 150 ships stranded.
Major oil companies and commercial shipping operators have withdrawn from the corridor. Shipping traffic is down at least 80 percent. Insurance premiums have hit a six-year high.
The Strait of Hormuz carries 21% of global oil trade. It is now effectively closed. This is not a risk premium it is a structural supply disruption with no visible end date.
Brent crude surged nearly 10 percent when markets opened on March 3, trading above $80. Analysts warn that a prolonged conflict could drive prices toward $100 per barrel. For context, Ghana, since January 2026 had already experienced few rounds of fuel price increases (because the National Petroleum Authority has bi-weekly pricing window), even before the latest escalation, as crude climbed from around $62 to $71 per barrel in the preceding weeks.
How the Shock Reaches Ghana: The Transmission Channels
Ghana does not solely import oil from the Gulf. But the structure of global oil markets means that price shocks originating in the Strait of Hormuz reach Accra just as surely as if they had originated next door. There are four primary channels through which the current crisis will affect Ghana’s economy.
The first and most immediate is fuel prices. Ghana’s petroleum products are priced at the pump based on import parity the landed cost of refined products on global markets, adjusted for the exchange rate. The Chamber of Oil Marketing Companies (COMAC) had already projected petrol would rise to GH¢12.04 per litre and diesel to GH¢13.22 per litre from 1st March before the escalation at Ras Tanura.
A Brent crude price approaching $100 per barrel would drive further and sharper increases. Commercial drivers, transport operators, individual car owners, and manufacturers will feel this first.
The second channel is food prices. Transport costs are embedded in the price of nearly everything Ghanaians eat and consume. When fuel rises, so do the fares charged by commercial vehicles, the costs of moving produce from farm to bigger markets in Accra and Kumasi, and the operating costs of businesses that use generators for power.
In 2022, this transmission was swift and severe: food inflation climbed above 60 percent as fuel, transport, and distribution costs surged together. Ghana’s food inflation had fallen to just 3.9 percent in January 2026, but that hard-won gain is now at risk.
The third channel is the exchange rate. Ghana’s cedi appreciated significantly in 2025, partly because the US dollar was broadly weak, Goldbod’s trading activities, and partly because Ghana’s improving fundamentals that has attracted confidence.
A sustained oil shock tends to strengthen the US dollar, as global investors seek safety, while simultaneously worsening Ghana’s trade balance through higher import costs. This double pressure would reverse some of the cedi’s gains. The cedi had already slipped from an average of GH¢10.79 in January to GH¢10.92 per dollar in February 2026.
The first pricing window in March was supposed to see some stability due to forex gain until President Trump begun “Operation Epic Fury”. Further dollar strength, uncertainty in Dubai a hub noted for gold trade may slow down gold import from Ghana, and import pressure could restart the depreciation cycle.
The fourth channel is fiscal. Ghana’s government subsidises premix fuel through a domestic pricing mechanism and is usually politically sensitive to fuel price increases after the public discontent of 2022. If the government intervenes to soften the blow of rising pump prices, the fiscal cost of that intervention would eat into the primary surplus that is the cornerstone of the IMF programme and the foundation of Ghana’s debt sustainability.
Conversely, if it passes costs fully through to consumers, inflation reaccelerates. There is no easy path. Which road will John Mahama take?
Ghana Now vs. Ghana in 2022: Stronger, But Not Safe
The comparison between Ghana’s position today and its position when Russia invaded Ukraine in 2022 is instructive both for what has improved and for what remains fragile.
Ghana’s buffers are substantially stronger. Gross international reserves of $13.8 billion represent 5.7 months of import cover well above the IMF’s recommended minimum and a dramatic improvement from the depleted reserve position of 2022.
The cedi, while not immune to pressure, has a stronger foundation than during its 2022 collapse. Inflation, at 3.8 percent in January 2026, is vastly lower than the 54 percent peak, leaving room for prices to rise without immediately triggering a crisis of confidence.
The debt position has fundamentally improved. Ghana’s debt-to-GDP ratio has fallen from 88 percent at peak to approximately 53 percent. Eurobond restructuring is complete. The government achieved a primary surplus of 2.6 percent of GDP in 2025 ahead of its IMF target. These are not cosmetic improvements; they represent genuine fiscal space that simply did not exist in 2022.
Ghana’s gross international reserves stand at $13.8 billion 5.7 months of import cover. In 2022, reserves were being rapidly depleted with no IMF backstop in place. The buffer is real.
But vulnerabilities persist. The IMF itself, in its most recent country report, notes that Ghana remains at “high risk of debt distress.” The government devotes an average of 36 percent of revenue to interest payments a burden that leaves limited room to absorb external shocks without borrowing more.
The energy sector, despite recent reforms, carries projected losses of $2 billion by 2026. Cocoa futures have plunged to their lowest level since late 2023, threatening one of Ghana’s three major export pillars. An emergency Cabinet session was convened in February to address the cocoa sector’s deepening problems.
The structural weakness that made Ghana so vulnerable in 2022, importing refined petroleum products despite being an oil producer, remains unresolved. The Tema Oil Refinery has operated far below capacity for years. Until Ghana can refine a meaningful share of its own crude domestically, every global oil shock will be amplified for Ghanaian consumers and the public finances.
Three Crises, Three Different Shocks
It is worth distinguishing precisely between the three external oil shocks Ghana has faced in recent years, because they differ in type and severity and so does the appropriate policy response.
The Russia–Ukraine war in 2022 was a supply shock in an overheated market. Sanctions removed a major exporter from the global system. Supply tightened structurally. Prices stayed elevated for months. Ghana absorbed this in a state of domestic fragility: the cedi was already under pressure, fiscal discipline was fraying ahead of the 2024 elections, and debt had reached crisis levels. The result was macroeconomic collapse.
The early phase of the US/Israel–Iran tensions in 2025 and early 2026 was a risk-premium shock. Markets were pricing the possibility of disruption without actual supply removal. Brent crude climbed toward $71 per barrel. Ghana felt this through three rounds of pump price increases since January, but the macroeconomic fundamentals remained broadly stable. The cedi partially cushioned the blow.
The IMF programme provided an anchor.
The current phase following the Ras Tanura attack and the closure of the Strait of Hormuz – is a structural supply shock. Infrastructure has been physically damaged. The world’s most critical energy chokepoint is effectively closed. Qatar, responsible for a fifth of global LNG exports, has suspended production. There is no ceasefire in sight. This is the scenario that transforms a manageable external pressure into a potential crisis.
For Ghana, the risk gradient has moved sharply upward. The question is now not whether this hurts, but how much and whether Ghana’s rebuilt defences can hold.
What Policymakers Must Do Now
Ghana’s policymakers face a narrow and delicate path. Three priorities are urgent.
First, fiscal discipline must not be sacrificed. The temptation to cushion consumers through fuel subsidies or social spending increases will be real particularly with the memory of 2022’s public discontent still fresh. But Ghana cannot afford to repeat the pattern of absorbing external shocks through borrowing.
The primary surplus achieved in 2025 is the single most important insurance policy Ghana has against this crisis. Protecting it must be non-negotiable. The IMF programme’s fiscal framework, which targets a 1.5 percent of GDP primary surplus for 2026, should be treated as a floor, not a ceiling.
Second, the Bank of Ghana must resist premature monetary easing. The Bank has cut its benchmark rate by 12.5 percentage points since July 2025 in response to falling inflation. That easing cycle was appropriate when inflation was declining and the external environment was calm. With oil prices surging and inflationary risks rising again, the pace of further cuts must be reassessed.
Anchoring inflation expectations is more important than stimulating growth at a moment when supply-side price pressures are intensifying.
Third, the structural reform agenda must be accelerated, not deferred. The current crisis provides a compelling, real-time argument for investing in domestic refining capacity at the Tema Oil Refinery (TOR), expanding renewable energy generation to reduce fuel dependence in power generation, and diversifying export revenues beyond gold, cocoa, and oil.
The Tree Crop Development Authority (TCDA) under its new leadership seems to be doing great. In additon to cocoa, government must drive investments into cashew, oil palm, rubber, mango and and shea nut value chain. These are not new recommendations they have appeared in every economic review of Ghana for a decade. What changes now is the urgency.
Every month Ghana remains dependent on imported refined products is another month in which a war it did not start can destabilise an economy it has spent three years repairing.
Conclusion: The Recovery Is Real – Now It Must Be Defended
Ghana’s economic recovery since 2023 is genuine and hard-earned. Inflation has been tamed. The cedi has stabilised. Reserves have been rebuilt. Debt has been restructured. These are not accounting fictions they represent years of difficult decisions and real sacrifices by Ghanaian households and businesses. From Azizanya in Ada-Foah to Tumu in Sisala East the sacrifices are yearning for better results.
The war in the Gulf threatens to test that recovery in the most serious way since it began. The attack on Ras Tanura, the paralysis of the Strait of Hormuz, and the suspension of Qatari LNG production represent a supply shock of the first order. If the conflict drags on, and there is currently no visible mechanism for de-escalation , fuel prices will rise further, food inflation will follow, the cedi will face renewed pressure, and the fiscal arithmetic will become progressively harder.
The difference between 2022 and 2026 is that Ghana is no longer entering a crisis without armour. The buffers are real. The institutions are stronger. The policy framework is more credible. But armour has limits, and sustained fire wears it down.
What is equally encouraging, however, is that Ghana’s response this time has been active rather than reactive. The Minister of Energy and Green Transitions, Dr John Jinapor, has convened emergency meetings bringing together all key stakeholders across the downstream petroleum sector to coordinate fuel supply and security in the face of the Gulf disruption.
These are not symbolic gestures they signal a government that is watching the horizon and moving before the storm arrives. The National Petroleum Authority has reinforced public confidence further, with its Chief Executive assuring Ghanaians that the country holds sufficient fuel stock to cover approximately five weeks of national demand. That buffer buys time, and time is exactly what policymakers need to manage an evolving crisis without being forced into panic decisions.
The signals from Parliament are equally significan for the long-term sustainability of our energy sector. The Majority Leader, Hon Mahama Ayaariga, has indicated government’s intention to bring the Renewable Energy Authority Bill before Parliament a landmark piece of legislation that, if enacted, would provide the institutional foundation for accelerating Ghana’s transition away from fossil fuel dependence.
At the same time, the Tema Oil Refinery has resumed refining crude oil, a development that, modest as it may be at this stage, marks a meaningful step toward the domestic refining capacity Ghana has long needed. Every barrel refined at Tema is a barrel Ghana does not need to import at elevated global prices.
Together, these initiatives emergency fuel security coordination, assured domestic stock, a legislative push for renewables, and renewed domestic refining represent exactly the kind of structural thinking that the crises of 2022 and 2025 demanded but did not always produce. They will not insulate Ghana from the full force of a prolonged Gulf war.
But they demonstrate that the country is building the architecture to absorb future shocks with far greater confidence than before.
Ghana’s leaders cannot control what happens in the Strait of Hormuz. They can control whether the hard choices of the past three years are protected or squandered in the months ahead and whether the initiatives now underway are pursued with the urgency the moment demands. The recovery was won the difficult way. These new steps show it is being defended with equal resolve.
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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
Source: www.myjoyonline.com