The World Bank has cautioned that a prolonged escalation of tensions in the Middle East could expose Ghana’s economy to renewed macroeconomic and financial pressures, potentially undermining some of the stability achieved through the country’s recent economic recovery programme.
According to the Bretton Woods institution, Ghana’s position as an oil producing nation and one of the world’s significant gold exporters could provide a degree of protection against external shocks. However, sustained disruptions to international trade arising from the conflict could generate broader economic difficulties and place additional pressure on the country’s macroeconomic and financial stability.
The concerns are contained in the World Bank’s Tenth Ghana Economic Update, which examines the country’s economic prospects under the theme, “Reset for Growth: Sustaining Macroeconomic Recovery and Unlocking Transport for Transformation.”
The report maintains that Ghana’s medium term economic outlook remains generally favourable, although the pace of expansion is expected to moderate as the economy moves closer to its estimated potential growth rate.
The World Bank projects that economic growth will reach 4.8 per cent in 2026 before gradually converging towards an estimated potential rate of approximately 5 per cent over the medium term. The institution also anticipates that inflation will remain within the Bank of Ghana’s target range of 8 per cent plus or minus 2 per cent, while the current account is expected to remain in surplus during 2026.
The World Bank further considers the government’s primary surplus target of 1.5 per cent of Gross Domestic Product to be attainable, provided the planned revenue mobilisation reforms are implemented effectively and consistently.
Nevertheless, the institution stressed that these projections should not be interpreted as guaranteed outcomes because several significant risks could derail the anticipated trajectory.
The report identifies Ghana’s principal medium term vulnerabilities as being increasingly associated with external economic shocks, commodity price fluctuations, geopolitical tensions and domestic policy challenges. The World Bank consequently warned that the risks surrounding macroeconomic stability are tilted towards the downside.
Externally, the institution identified volatility in international gold prices, increasing geoeconomic fragmentation and the continuing conflict in the Middle East as major sources of concern. According to the report, prolonged instability in the region could increase the cost of energy, food and agricultural inputs, thereby placing pressure on Ghana’s inflation rate while simultaneously weakening economic growth.
Higher international energy and food prices could also increase production and transportation costs for businesses and households, potentially affecting consumer prices, government expenditure and the country’s foreign exchange requirements. At the same time, weaker global economic activity could reduce demand for Ghanaian exports and diminish fiscal revenues associated with commodity production and trade.
The World Bank also warned that domestic vulnerabilities could compound the effects of these external developments. Policy slippages within the energy and cocoa sectors, together with fiscal pressures created by the extension of temporary relief measures such as fuel price interventions, could weaken the macroeconomic improvements recorded in recent years.
The institution cautioned that such developments could also undermine Ghana’s debt sustainability objectives if they create additional expenditure pressures without corresponding improvements in government revenue.
Another concern highlighted by the World Bank is the expected increase in debt service obligations during 2027 and 2028. The institution said these rising repayment requirements could create rollover risks, particularly because the government continues to depend substantially on short term domestic debt instruments to meet its financing needs.
The reopening of Ghana’s domestic bond market in April 2026, however, is expected to provide some relief by allowing the government to access longer maturity financing instruments. The World Bank believes this development could gradually ease refinancing pressures and strengthen the structure of domestic public debt.
Against this backdrop, the World Bank has called for a stronger emphasis on revenue driven fiscal consolidation as Ghana seeks to preserve the gains achieved through its economic stabilisation programme.
The institution considers domestic revenue mobilisation to be a fundamental component of long term fiscal sustainability and argues that Ghana cannot rely predominantly on expenditure reductions to maintain fiscal discipline.
According to the report, the primary fiscal surplus recorded by the country has been achieved largely through underspending rather than through broad based improvements in domestic revenue collection. The World Bank therefore recommends expanding the tax base, improving taxpayer compliance and developing a more effective tax administration system capable of ensuring that revenue is collected fairly across different segments of the economy.
The institution also stressed the importance of improving the quality of public expenditure. It acknowledged that the government introduced policy measures in 2025 to restore fiscal consolidation, including amendments to the Public Financial Management and Public Procurement Acts. These reforms were designed to strengthen commitment controls and reduce the likelihood of future fiscal slippages.
However, the World Bank warned that repeatedly reducing capital expenditure, infrastructure maintenance and social transfers could weaken the foundations required to sustain economic growth over the medium term.
The institution therefore urged the government to protect high return public investments while preserving essential social expenditure and strengthening public financial management systems to improve efficiency and accountability.
The World Bank emphasised that fiscal discipline and economic expansion should not be treated as competing objectives. Instead, it argued that carefully targeted public expenditure can reinforce fiscal sustainability when resources are directed towards investments capable of raising productivity, expanding economic activity and improving long term growth prospects.
The report also called for the development of a more comprehensive fiscal risk management framework. Such an architecture, according to the World Bank, should include systematic disclosure of contingent liabilities, the incorporation of different risk scenarios into national budget planning and stronger accountability mechanisms for state owned enterprises.
The institution believes that improving the government’s ability to identify, disclose and manage fiscal risks will be essential to preventing unexpected financial obligations from undermining future budgets.
For Ghana, the World Bank’s assessment therefore presents a mixed economic picture. While the country has recorded meaningful progress towards macroeconomic stabilisation and retains favourable medium term growth prospects, the recovery remains vulnerable to both international disruptions and domestic policy weaknesses.
The continuing conflict in the Middle East represents one of the external threats that could complicate this recovery, particularly if prolonged instability causes sustained increases in global energy, food and agricultural input prices.
The World Bank consequently maintains that Ghana’s economic gains can be preserved only through consistent fiscal reforms, stronger domestic revenue mobilisation, prudent expenditure management and effective management of emerging external risks.
The institution’s central message is that Ghana’s projected economic recovery remains achievable, but maintaining that trajectory will require disciplined implementation of reforms and a deliberate effort to ensure that macroeconomic stability is supported by productive public investment, resilient institutions and stronger fiscal management.
