Ghana’s economic story is no longer just about debt, inflation, or fiscal consolidation. It is also a story about what the country chose not to do.
One of the least discussed but most consequential policy reversals in Ghana’s recent economic history is the quiet abandonment of sovereign risk hedging after 2013. At a time when volatility in oil prices, exchange rates, and global interest rates was becoming the defining feature of the global economy, Ghana elected to remain exposed and has PAID dearly for it.
Under President John Agyekum Kufuor, Ghana experimented cautiously but deliberately with commodity price hedging, particularly in petroleum. The objective was not speculation, but insurance: smoothing revenues, protecting budgets, and reducing the transmission of global shocks into domestic inflation and fiscal instability.
That framework, imperfect as it was, reflected a crucial insight: commodity dependent economies cannot afford to gamble on spot prices.
Yet after 2013, this insight disappeared from policy thinking.
Between 2013 and 2019, Ghana did not operate a structured, transparent sovereign hedging programme: not for oil, not for foreign exchange exposure, not for interest-rate risk on public debt. What replaced it was not innovation, but improvisation.
Firefighting instead of insurance
In the absence of hedging, Ghana relied on:
• ad-hoc foreign exchange interventions,
• debt reprofiling and refinancing,
• fuel price pass-through to consumers,
• and repeated budget revisions.
These are not risk-management tools. They are emergency responses.
Where hedging transfers risk to the market at a known cost, Ghana absorbed risk directly through depleted reserves, higher inflation, exchange-rate depreciation, and rising debt servicing costs. Volatility was not managed; it was endured.
The oil price collapse of 2014–2016 should have been a turning point. It wasn’t. Instead, Ghana remained fully exposed just as global monetary tightening loomed.
The consequences are now visible
By the early 2020s, the bill came due:
• debt dynamics deteriorated rapidly,
• currency instability became chronic,
• fiscal buffers evaporated,
• and confidence domestic and external eroded.
The post-2022 crisis did not emerge from nowhere. It was the cumulative result of years of unmanaged exposure in an economy structurally vulnerable to external shocks.
This is not hindsight. Countries like Mexico also commodity-dependent institutionalised oil hedging as a permanent feature of fiscal policy. The difference is not ideology; it is seriousness about risk.
The resistance to hedging was never technical. It was political.
Hedging requires paying premiums in good years. It produces accounting “losses” when prices move favourably. It rewards patience, discipline, and institutions not election cycles.
In an environment of weak fiscal credibility and short-term political incentives, hedging became an easy target: misunderstood, under-explained, and eventually discarded.
That decision was costly.
As Ghana stands in 2026, slowly stabilising but still vulnerable, the question is not whether hedging guarantees prosperity. It does not.
The real question is simpler:
Can Ghana afford to remain unhedged in a world defined by volatility?
With commodity prices uncertain, climate risks rising, and global financial conditions structurally tighter, exposure is no longer a neutral stance it is a policy choice.
Recent efforts to rebuild reserves, including gold-based strategies, are steps forward. But without a formal, rules-based sovereign risk management framework, Ghana risks repeating the same cycle under new labels.
The real reform is institutional
What Ghana needs now is not a one-off transaction, but a commitment:
• a sovereign risk management office with legal backing,
• clear rules on when and how hedging instruments are used,
• parliamentary oversight,
• and public education that distinguishes insurance from speculation.
Hedging should not depend on who is in power. It should be boring, predictable, and permanent.
The period between 2013 and 2019 will likely be remembered as a lost opportunity, years when Ghana chose exposure over protection, optimism over prudence.
In 2026, the lesson is no longer academic. It is existential.
Macroeconomic stability is not achieved by hope, press releases, or emergency interventions. It is built quietly, patiently, through institutions that respect risk.
Ghana once understood this.
The task now is to remember and act accordingly.
GHANA MUST WORK AGAIN
Lord Fiifi Quayle 