The Bank of Ghana has admitted that the prolonged conflict in the Middle East poses a significant risk of escalating crude oil prices and the Ghanaian economy

According to the Central Bank, Ghana faces a higher oil import bill alongside increased demand for foreign exchange, thereby exerting pressure on the domestic currency.

“The Strait of Hormuz handles about 30% of shipping, including crude oil. A closure will cause oil prices to surge above the notional US$100/barrel mark with adverse implications for Ghana’s energy import bill, foreign exchange reserves, exchange rate stability, and inflation. Higher inflation can compress real incomes and dampen consumption and investment”.

Nevertheless, the Central Bank said the country’s robust international reserve buffer offers some protection against potential exchange rate volatility and its impact on domestic prices.

These were responses to questions from the media regarding the US/Israeli and Iran conflict

“In a more adverse scenario, remedial measures could be implemented to mitigate the economic consequences of surging oil prices”, it added.

The Central Bank added it has carefully assessed the potential implications of the ongoing conflict in the Middle East on Ghana’s external sector. “Our analysis incorporates a range of possible oil price scenarios, including a pessimistic case where prices could rise to as high as US$150 per barrel. The results of our sensitivity analysis indicate that across all scenarios, Ghana’s reserve levels remain sufficient to meet the needs of the economy”.

Furthermore, it said under the Ghana Accelerated National Reserves Accumulation Policy (GANRAP), reserves are projected to reach 15 months of import cover over the medium-term (2026-2028).

This initiative, together with strong domestic fundamentals, it alluded provides a solid cushion against the adverse effects of rising oil prices. We are confident that the Ghanaian economy is now better positioned than ever to withstand external shocks and preserve stability for households and businesses alike.