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 government moved to contain a sharp rise in domestic fuel prices.

The Bretton Woods institution noted that while some countries have sought to shield consumers through tax cuts, stabilisation 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 stabilisation 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 read.

At an emergency meeting on Thursday, April 9, 2026, 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 cancelling 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 GH¢13.30 per litre and diesel by nearly 19 percent to GH¢17.10 per litre 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. Inflation slowed to 3.2 percent in March 2026, while improvements in the primary fiscal balance rank among the strongest in sub-Saharan Africa over the 2024–2026 period.

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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.

“The slowdown of inflation has been creating space for further monetary policy easing. However, upside risks to inflation remain – global uncertainty, higher fuel and food prices as well as a stronger dollar could reignite inflationary pressures and slow, or even reverse, the normalisation of monetary policy,” it said.

This risk is central to 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.

Already, oil markets remain tightly tethered to developments in the Middle East with prices trading in a volatile US$95–US$100 per barrel range as of April 10, amid a fragile ceasefire between the United States and Iran.

The truce, brokered last week and intended to hold for two weeks, included provisions to ease tensions and reopen shipping through the Strait of Hormuz – a critical artery for global crude flows, carrying an estimated 20 percent.

Brent crude initially fell sub-US$100 on the announcement, on account of expectations for a partial restoration of supply.

That relief has proved short-lived. Implementation of the ceasefire has been uneven, with maritime traffic through the Strait still heavily constrained and subject to Iranian oversight – leaving a backlog of vessels and continued uncertainty over the pace of supply normalisation.

At the same time, hostilities across the wider region have not fully abated. Reports of renewed strikes and drone attacks involving Iran and its regional proxies, alongside ongoing Israeli military activity outside the immediate scope of the agreement, have reinforced concerns that the truce may not hold.

The result is a market that continues to price in disruption risk, with oil remaining elevated and highly sensitive to further geopolitical developments.

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 fertiliser trade, have driven fertiliser prices sharply higher.

Urea prices rose by about 37 percent in the first week of the escalation and reached roughly US$715 per tonne by the second week, about 45 percent above pre-conflict levels.

Ghana, alongside Côte d’Ivoire, is assessed as facing medium-to-high fertiliser supply risk, with potential shortages coinciding with the main planting season which runs from mid-March through mid-year.

In 2025, government subsidised 200,000 tonnes of fertiliser against estimated annual demand of more than 426,000 tonnes. It has since shifted to a policy of free distribution, increasing the fiscal burden at a time of rising global prices.

Fertiliser use in Ghana, at 28.9 kilogrammes per hectare in 2023, remains below the 50 kg/ha target set under the 2006 Abuja Declaration.

Any disruption to supply or reduction in application rates risks lowering yields and adding to domestic food price pressures.