Ghana’s Economic Recovery Remains Fragile Amid Commodity Volatility and Global Financial Tightening – PwC

 

Ghana’s economy remains highly vulnerable to fluctuations in global commodity prices and tightening international financial conditions, according to a new assessment by professional services firm PwC.

The firm warned that while recent macroeconomic stabilisation efforts have delivered some progress, Ghana’s heavy reliance on commodity exports such as gold, cocoa and crude oil continues to expose the country to external shocks.

PwC noted that swings in global commodity prices can significantly affect government revenue, export earnings and foreign exchange inflows, with direct implications for fiscal stability and economic growth.

Exposure to External Risks

According to the report, tighter global monetary policy — particularly in advanced economies — poses an additional risk by increasing borrowing costs and limiting access to external financing for developing countries like Ghana.

Higher global interest rates tend to strengthen major currencies such as the US dollar, placing pressure on emerging market currencies, including the Ghana cedi, and increasing the cost of servicing foreign debt.

PwC cautioned that these external pressures could undermine Ghana’s fiscal consolidation efforts and slow the pace of economic recovery if not carefully managed.

Commodity Dependence Remains Structural Risk

The firm emphasised that Ghana’s continued dependence on primary commodities makes the economy especially sensitive to price volatility on international markets.

Sharp declines in commodity prices can reduce export receipts, weaken the currency and strain government finances, while sudden price increases may provide temporary relief but do not address underlying structural vulnerabilities.

PwC said this cyclical exposure underscores the urgent need for Ghana to accelerate economic diversification, strengthen domestic revenue mobilisation and expand value-added production.

Sustained Reforms Critical for Stability

The report acknowledged recent policy measures aimed at restoring macroeconomic stability, including fiscal tightening, inflation control and structural reforms under ongoing economic recovery programmes.

However, PwC stressed that sustained reforms will be critical to building resilience against external shocks and ensuring long-term economic stability.

The firm urged policymakers to prioritise export diversification, enhance productivity, deepen industrialisation and reduce reliance on commodity-driven growth.

Strengthening domestic industries and expanding non-traditional exports, PwC noted, would help cushion the economy from global volatility and support more sustainable and inclusive growth over the long term.

 

Treasury Bill Auction Oversubscribed by 253% as Investor Demand Surges, Rates Drop to 8.6%

Government securities continued to attract strong investor appetite, with the latest treasury bills auction oversubscribed by 253 per cent as falling interest rates boosted demand and reduced borrowing costs.

According to auction results released by the Bank of Ghana, total bids reached GH¢22.67 billion, significantly exceeding the government’s target of GH¢6.41 billion.

However, the government accepted GH¢8.99 billion of the bids and rejected approximately GH¢13 billion, reflecting a selective borrowing strategy aimed at managing debt costs.

Strong Demand Across All Tenors

Investor demand was robust across all maturities, with the 364-day treasury bill attracting the highest volume of bids. A total of GH¢7.76 billion was tendered for the one-year bill, of which GH¢3.48 billion was accepted.

Similarly, the 91-day bill recorded GH¢7.64 billion in bids, with GH¢3.41 billion accepted, while the 182-day bill saw GH¢7.26 billion tendered, of which GH¢2.08 billion was taken up.

The strong participation underscores sustained investor confidence in short-term government instruments, amid improving macroeconomic conditions and declining yields.

Interest Rates Decline Sharply

Interest rates fell significantly across all maturities, reducing the government’s cost of borrowing.

The yield on the 91-day bill dropped sharply by 136 basis points to 8.60 per cent, while the 182-day bill declined to 10.67 per cent from 11.81 per cent.

The 364-day bill also saw its yield fall by 100 basis points to 11.06 per cent.

The decline in yields reflects increased demand for government securities and improved liquidity in the financial system, allowing the government to refinance its obligations at lower cost.

Lower Borrowing Costs Signal Improving Market Conditions

The oversubscription trend suggests that investors continue to favour treasury bills as a relatively safe investment option, even as yields decline.

The government’s decision to reject a significant portion of bids also indicates efforts to limit excessive borrowing and manage debt sustainability while taking advantage of favourable market conditions.

Analysts say sustained investor demand and falling yields could support fiscal consolidation efforts by reducing interest expenses and easing pressure on public finances in the near term.