Pension Fund Investment Restrictions under Review in Ghana

Ghana’s financial authorities are reviewing restrictions imposed on pensions funds that limit their investments in offshore assets.

The National Pensions Regulatory Authority previously introduced a requirement that pension funds seek authorization before buying foreign assets as a way to preserve foreign-exchange. The measure was implemented after Ghana began a restructuring of its debt, Nana Akua Asare, a spokeswoman for the NPRA, said by phone on Tuesday.

A review is now being conducted to determine the circumstances under which such investments can be authorized, she said.

Ghanaian law allows private pension funds to invest as much as 5% of their assets in offshore instruments. Pension fund assets reached 71 billion cedis ($4.5 billion) at the end of the first quarter, of which more than 50 billion cedis were managed under private schemes, the NPRA said on its website.

Ghana began restructuring almost all of its debt in early 2023 as part of a deal with the International Monetary Fund. The country completed the overhaul earlier this year but the debt crisis caused a shortage of dollars as the country lost access to the international capital markets. That compelled it to take measures to ensure robust domestic supply of foreign exchange.

The cedi has weakened 25% this year to the dollar, on top of its 15% loss in 2023. The currency of Africa’s biggest gold producer got some relief in the last two weeks after an increase in the output of the metal spurred the central bank to sell more dollars to the market.

It gained 0.2% to 15.9 per dollar at 8:07 p.m. in the capital, Accra, the strongest level in more than five weeks.

Source: Bloomberg