Dennis Nsafoah, an Assistant Professor of Economics at Niagara University in New York, has stated that Ghana’s 2026 Mid-Year Fiscal Policy Review contains a policy choice that deserves much more scrutiny than it has received.

According to him, while keeping the overall expenditure envelope broadly unchanged, the government has reallocated GH¢5 billion away from capital expenditure to GoldBod to fund the Ghana Accelerated National Reserve Accumulation Policy (GANRAP), whose objective is to raise international reserves to 15 months of import cover by 2028.

In effect, Dr. Nsafoah, who is a member of the Research Committee of Tesah Capital, said the Mid-Year Review preserves total spending while shifting its composition from productive capital investment toward reserve accumulation.

“That choice would already warrant debate on its own. But the recently released IMF [International Monetary Fund] staff reports make it considerably harder to defend.

The IMF’s assessment is unusually clear: Ghana’s reserve adequacy is estimated at about six months of prospective imports, not 15. More importantly, the Fund explicitly states that reserves as high as the 15 months envisaged under GANRAP “would not be advisable on precautionary grounds alone” because of their non-negligible economic costs.

Dr. Nsafoah argued that this begs the question: why is the government pursuing a reserve target that significantly exceeds what its principal multilateral adviser considers adequate while simultaneously reducing capital expenditure?

“The IMF is not arguing against reserve accumulation. This distinction is important. The IMF is not recommending that Ghana stop building reserves. Its assessment is that Ghana, as a commodity exporter exposed to terms-of-trade shocks, capital-flow volatility and other external vulnerabilities, should maintain a healthy reserve buffer. Its estimate of adequate reserves is approximately six months of imports”.

Fifteen Months has a Very Large Opportunity cost

Dr. Nsafoah continued that the economics of reserve accumulation becomes less favourable as reserves rise, noting that at low levels, the benefits are substantial.

He mentioned that reserves protect a country from sudden stops in capital flows, commodity-price shocks, temporary export disruptions and disorderly exchange-rate movements. However, those benefits diminish as the reserve stock becomes larger.

He added that resources used to acquire low-yielding safe foreign assets could instead be deployed toward higher-return domestic investment.

“This is no longer an abstract theoretical trade-off. The Mid-Year Budget has made it concrete. The government has directed GH¢5 billion to GoldBod for GANRAP while reducing capital expenditure by GH¢5 billion. In effect, Ghana is exchanging one form of national asset for another: fewer resources for productive capital formation today in order to accumulate a larger stock of foreign reserves”.

He added that the relevant economic question is whether the return from moving Ghana’s reserves from an adequate level of around six months toward 15 months exceeds the return from roads, irrigation, energy infrastructure, hospitals, schools and other productivity-enhancing public investments.

“It is difficult to see the economic case”, he added.