Accra: Ghana is among the African economies most exposed to escalating conflict in the Middle East while having limited fiscal space to respond, according to the World Bank's latest Africa Economic Update as the government moved to contain a sharp rise in domestic fuel prices.
According to Ghana Web, the Bretton Woods institution noted that while some countries have sought to shield consumers through tax cuts, stabilization mechanisms, or temporary subsidies, others with tighter fiscal constraints have had little choice but to pass through higher costs. Sub-Saharan African governments' responses to the energy price shock have varied according to their fiscal space and reliance on fuel imports. Some countries have cushioned consumers by reducing or repurposing fuel levies and stabilization funds (Kenya and Namibia) or introducing emergency fuel subsidies (Ethiopia), while others with limited fiscal room have raised regulated fuel prices or caps (Ghana, Malawi, Mali, and Tanzania). In countries with little capacity to intervene, fuel prices have surged sharply (Somalia and Zimbabwe), the report stated.
At an emergency meeting chaired by President John Dramani Mahama, Cabinet directed the finance and energy ministers to secure a reduction in pump prices at the next pricing window by suspending selected fuel taxes and margins for four weeks, subject to review. The transport minister was also instructed to accelerate the rollout of 100 Metro Mass Transit buses on high-traffic routes, with fares set below those charged by private operators. Ministers and senior officials were further ordered to comply with an earlier directive canceling fuel allocations and allowances.
The intervention follows a steep increase in fuel prices from April 1, with petrol rising by about 15 percent to roughly GHS13.30 per liter and diesel by nearly 19 percent to GHS17.10 per liter for the April 1-15 pricing window, according to the National Petroleum Authority. The increases resulted from a surge in global oil prices after the escalation of tensions involving Iran, which pushed Brent crude from the low US$70 a barrel in late February to above US$110 by end-March.
The World Bank's readiness heatmap, which assesses exposure, vulnerability, and policy space, places Ghana in a mixed position. As a net petroleum exporter, with oil and gas net imports estimated at minus 0.7 percent of Gross Domestic Product (GDP), the country appears relatively insulated from energy price shocks affecting import-dependent peers. However, these gains are offset by tight underlying constraints. General government debt stands at about 56 percent of GDP, the fiscal deficit at 1.0 percent, and foreign exchange reserves at 3.9 months of import cover.
The Bank notes that in nearly four out of five African countries, interest payments now exceed spending on health or education, a dynamic that significantly limits the scope for fiscal intervention in Ghana. The report warns that recent disinflation across countries including Ghana could prove fragile.
This risk is central to the government's response. The Bank of Ghana has reduced its policy rate over the past year amid a sharp disinflation trend, easing credit conditions. A renewed rise in fuel and food prices could interrupt that trajectory and tighten financing conditions before the recovery is firmly established.
Beyond energy, the World Bank highlights growing risks to food supply. Disruptions to maritime traffic through the Strait, which is also a key route for global fertilizer trade, have driven fertilizer prices sharply higher. Ghana, alongside C´te d'Ivoire, is assessed as facing medium-to-high fertilizer supply risk, with potential shortages coinciding with the main planting season which runs from mid-March through mid-year.
In 2025, the government subsidized 200,000 tonnes of fertilizer against estimated annual demand of more than 426,000 tonnes. Any disruption to supply or reduction in application rates risks lowering yields and adding to domestic food price pressures.