Economic Policy Advisor at the Office of the President, Seth Terkper, has issued a sobering warning about the potential ripple effects of escalating tensions in the Middle East on Ghana’s fragile economic recovery.

According to Mr. Terkper, geopolitical turmoil in oil-producing regions could ignite a surge in global crude oil prices, ultimately worsening inflation and triggering renewed depreciation of the Ghanaian cedi.

His remarks come as conflicts and instability continue to roil key Middle Eastern nations, sparking uncertainty across international commodity markets. “Yes, it could, it has, for example, reversed the prices of crude oil,” Mr. Terkper observed, referencing the price volatility that often follows heightened geopolitical tensions.

The consequences for Ghana, a country heavily reliant on petroleum imports, could be significant if the crisis intensifies without adequate preparation.

A Surge in Import Costs and Inflationary Pressures

Ghana’s economy has shown signs of stabilisation in recent months, buoyed by improvements in the cedi’s performance and slowing inflation. However, Mr. Terkper warned that this progress could quickly unravel if global oil prices spike. Rising crude prices translate directly into higher import bills for fuel and related products, which then filter through to transportation costs, food prices, and general consumer goods.

“The most important thing for me is to prepare for a crisis, such as what is happening in the Middle East. You don’t prepare for a crisis during a crisis; you anticipate the crisis and prepare for crisis when the times are good.”
Seth Terkper

His call underscores the precarious balance Ghana must strike between celebrating recent gains and acknowledging the vulnerabilities that remain beneath the surface.

Lessons From Past Economic Shocks

Terkper’s caution is rooted in experience. During his tenure as Minister of Finance, Ghana grappled with significant external shocks, including fluctuating commodity prices and global economic slowdowns. Those challenges exposed structural weaknesses in the country’s economic buffers and tested policymakers’ resolve.

Reflecting on those lessons, Terkper noted that robust financial cushions are essential to withstand sudden headwinds. “We should not downplay the global implications of geopolitical crises,” he stated. “The world economy is deeply interconnected, and shocks in one region quickly become challenges for others.”

Indeed, Ghana’s dependence on fuel imports means that even modest increases in crude oil prices can amplify domestic inflation and drain scarce foreign exchange reserves, putting pressure on the cedi and constraining public finances.

Strengthening Stabilisation and Sinking Funds

To avert such a scenario, Mr. Terkper urged policymakers to focus on building fiscal resilience through proactive measures. Chief among his recommendations is the reinforcement of the Stabilisation Fund and Sinking Fund—key tools designed to cushion the economy against external volatility.

“These funds are our insurance policies. They allow us to smooth out the impact of global commodity price swings and maintain stability in critical times.”
Seth Terkper

The Stabilisation Fund, in particular, is meant to accumulate excess petroleum revenues when prices are high and release resources during downturns. However, over the years, the fund has faced withdrawals to cover budget deficits, reducing its capacity to serve as a true buffer.

Mr. Terkper stressed the importance of replenishing these reserves while economic conditions allow. “It’s precisely when things look stable that you need to prepare,” he advised.

The former Finance Minister’s intervention comes amid growing calls for greater fiscal discipline and long-term planning in Ghana’s economic management. While recent IMF-backed reforms have improved public confidence and supported the cedi, experts caution that these gains remain vulnerable to external shocks.

Mr. Terkper’s warning is a timely reminder that geopolitical tensions, such as those currently unfolding in the Middle East, can derail even the most carefully laid plans. In an increasingly volatile world, building resilience is not optional—it is imperative.

As Ghana navigates the uncertain months ahead, policymakers will face difficult choices. Balancing immediate needs with prudent savings, investing in economic diversification, and maintaining fiscal discipline will all be critical to safeguarding the country’s progress.

For citizens, Terkper’s message is equally relevant. Higher fuel costs and rising inflation could erode purchasing power and strain household budgets if the worst-case scenario materialises.