Bank of Ghana First Deputy Governor Dr. Zakari Mumuni has urged emerging economies to shift focus from attracting volatile foreign capital toward building domestic institutional strength, warning that the era of predictable global liquidity has fundamentally changed.
Dr. Mumuni delivered the keynote address at the 64th ACI Financial Market Association (FMA) World Congress in Accra, telling delegates that geopolitical tensions, rising inflation risks, and tightening global financial conditions are reshaping the investment landscape for developing economies in ways that demand a new policy orientation.
“Global liquidity remains abundant, yet increasingly volatile,” he said.
The International Monetary Fund (IMF) has revised its 2026 global growth forecast down to 3.1 percent from 3.3 percent, citing risks from prolonged conflict in the Middle East. The blockade of the Strait of Hormuz has pushed energy prices higher, reigniting inflation concerns across both advanced and developing economies and raising expectations of sustained monetary tightening in major markets.
Dr. Mumuni said higher interest rates in advanced economies, particularly the United States, would likely continue drawing capital away from emerging markets toward safer assets, deepening refinancing risks and exchange rate pressures for developing countries. He identified five strategic priorities to withstand such pressures: fiscal credibility, reserve adequacy, stronger financial sector regulation, institutional depth, and attracting productive long-term capital. He emphasised that foreign exchange reserves should be treated as self-insurance rather than surplus, and called on governments to draw a clear distinction between productive long-term investment and volatile portfolio flows that can reverse sharply under stress.
Ghana’s own economic indicators have strengthened considerably in recent months. The Composite Index of Economic Activity expanded 12.6 percent year on year in March 2026, up from 2.3 percent a year earlier, driven by stronger private sector credit, industrial output, consumption, and trade activity. Headline inflation edged up to 3.4 percent in April from 3.2 percent in March, its first increase since December 2024, though core inflation continued to ease.
The banking sector has also improved. Total industry assets grew 26.6 percent year on year to GH¢493.9 billion in April, the capital adequacy ratio (CAR) climbed to 22.3 percent from 17.5 percent, and the non-performing loan (NPL) ratio fell to 18.0 percent from 23.6 percent. The Bank of Ghana’s lending rates declined to 16.3 percent in April from 27.4 percent a year earlier, supporting a recovery in real private sector credit growth to 24.5 percent.
On the external front, Ghana’s current account surplus widened to US$3.10 billion in the first quarter of 2026 from US$2.43 billion a year earlier, backed by strong gold and cocoa export revenues. Gross international reserves reached US$14.4 billion by May 18, equivalent to 5.7 months of import cover. The cedi has nonetheless depreciated 8.4 percent against the US dollar this year, driven by energy sector demand and corporate dividend outflows.
Dr. Mumuni said the countries best positioned to weather future global tightening would be those that maintained disciplined fiscal and monetary policies while steadily building stronger institutions over time.
