Ghana’s economic buffer, its current account surplus, expected to shrink by 3 per cent in 2025, following a drastic cut in aid from the United States, according to a recent forecast by ratings agency Fitch.
The decline is primarily attributed to the U.S. government’s decision to slash funding to the United States Agency for International Development (USAID) by 90 per cent. Fitch warned that the cutback could significantly affect Ghana and other African nations, where international aid plays a critical role in foreign exchange inflows. In Ghana’s case, such transfers currently make up about half of all net inflows to the current account.
Historically, the United States has contributed roughly 20 per cent of Ghana’s total aid receipts. USAID’s support has spanned essential sectors such as health, education, agriculture, and governance — areas now potentially at risk of disruption due to the funding drop.
While Ghana may see some relief through increased remittances and aid from other development partners, Fitch cautioned that these alternative sources would not fully offset the shortfall left by the U.S. withdrawal.
Despite this looming challenge, Ghana’s external position appears more resilient compared to the previous five years. Between 2021 and 2023, the country experienced significant pressure on its reserves, largely due to capital and financial account outflows. These were driven by global instability following the Russia-Ukraine conflict, rising interest rates in advanced economies, and escalating concerns over Ghana’s debt sustainability.
Encouragingly, 2024 marked a turnaround, with gross international reserves rising to USD 6.4 billion by December — the highest in three years. This recovery was underpinned by a strong current account surplus, ongoing disbursements from the International Monetary Fund (IMF), and reduced capital outflows.
Looking ahead, Fitch anticipates a continuation of this positive trend. Investor confidence, bolstered by Ghana’s recently completed debt restructuring program, is expected to attract fresh capital inflows. Combined with a still-sizable current account surplus, Ghana’s international reserves are projected to climb to USD 8.8 billion by the end of 2025, offering around 3.5 months of import cover.