Gross Reserves Rise to $7.5 Billion Boosted by Gold and Oil Exports
Ghana’s gross international reserves surged in August 2024, bolstered by robust export performance and the success of the country’s domestic gold purchase programme. The Bank of Ghana, in its 120th Monetary Policy Committee (MPC) press briefing, reported that gross international reserves increased by $1.58 billion, reaching $7.5 billion by the end of August—equivalent to 3.4 months of import cover. Net reserves also climbed by $1.73 billion to $4.92 billion, reflecting a stronger external balance.
The substantial rise in reserves is largely credited to the exceptional performance of Ghana’s gold sector. Gold exports soared by 62.2% to $7.27 billion, reinforcing the country’s status as a leading producer. Crude oil exports also played a pivotal role, growing by 16.7% to $2.77 billion, contributing to a robust trade surplus.
Ghana’s external payment position showed remarkable strength during the first eight months of 2024, with the trade balance registering a provisional surplus of $2.78 billion. This marks a considerable improvement over the $1.66 billion surplus recorded in the same period last year, driven primarily by booming gold and oil exports. Total exports rose 22.3% to $12.92 billion, underscoring the resilience of Ghana’s key commodity sectors.
However, not all sectors shared in the gains. Cocoa, a traditional mainstay of Ghana’s export economy, faced significant challenges. Cocoa exports—including both beans and products—plummeted by 42.7% to $917.8 million. This decline was largely attributed to extreme weather conditions, which disrupted output and weakened the country’s agricultural performance.
On the import side, Ghana’s total import bill increased by 14.0% to $10.14 billion. Oil imports rose modestly, up 3.6% to $3.0 billion, while non-oil imports expanded by a more substantial 19.0%, reaching $7.1 billion. The rise in non-oil imports reflects growing domestic demand, a positive indicator of underlying economic activity, even as inflationary pressures continue to ease.
The upward trajectory of Ghana’s international reserves, driven by gold and crude oil exports, offers a more favorable external outlook for the economy. The central bank’s strategic focus on bolstering its gold reserves has paid off handsomely, ensuring that the country’s import cover remains strong amid global economic uncertainty.
Governor of the Bank of Ghana, Dr. Ernest Addison, highlighted the importance of maintaining this momentum in the face of ongoing challenges. “The significant accumulation of reserves positions the economy favorably, but we must remain vigilant, particularly given the volatility in global commodity markets,” Dr Addison stated at the press briefing.
Despite the positive developments, the sharp decline in cocoa exports underscores Ghana’s vulnerability to climate risks, particularly in sectors dependent on agricultural output. With cocoa serving as a crucial export commodity, the prolonged impact of extreme weather conditions raises concerns about long-term sustainability in this sector.
Meanwhile, the overall improvement in Ghana’s external accounts comes at a critical juncture. The country has been grappling with debt and inflation pressures, prompting the government to secure a $3 billion financial support package from the International Monetary Fund (IMF). The rise in reserves is expected to provide the much-needed relief, strengthening the country’s foreign exchange position and mitigating some of the risks posed by global market volatility.
As Ghana navigates its economic recovery, the balance between its key export sectors—gold, oil, and cocoa—will be pivotal. While gold and oil continue to provide robust revenue streams, the performance of cocoa could weigh on broader economic growth if adverse conditions persist.
For now, however, the strong build-up of reserves offers a welcome cushion for Ghana’s external accounts, positioning the country to weather potential global shocks and maintain a stable macroeconomic environment in the near term.
