The Bank of Ghana (BoG) has struck a cautiously optimistic tone on the country’s macroeconomic outlook, signalling resilience in the face of exchange rate volatility while outlining fresh initiatives to deepen private sector credit and accelerate digital finance.
Speaking at a Monetary Policy Committee (MPC) media briefing, Dr Johnson Asiama, the BoG Governor said current macroeconomic conditions show broad alignment with policy expectations “in real terms,” even though the cedi has experienced bouts of nominal volatility.
“We do understand why those volatilities are coming in, but we believe we have the buffers,” he stated, underscoring the Bank’s confidence in its reserve position and policy framework.
A key highlight from the briefing was the steady recovery in private sector credit, which the Governor described as critical to broad-based economic growth.
Commerce continues to dominate credit allocation, reflecting its fluid and responsive nature within the economy. However, authorities expect all sectors to benefit if current lending trends are sustained.
Dr Asiama pointed to a significant improvement in borrowing conditions, noting that lending rates had dropped sharply compared to prior years.
“There used to be people in the private sector borrowing at over 30 percent. Currently… you could borrow at about 10 percent,” he said.
This decline has been driven in part by improved macro stability and monetary policy adjustments, creating a more favourable environment for businesses and households.
In line with financial inclusion goals, the Bank is advancing plans for a structured digital credit system. Unlike informal microcredit schemes, the proposed framework will be regulated and integrated into the formal financial system.
“Very soon, it should be possible… to raise a loan on your mobile phone,” the Governor explained, adding that the initiative is intended to support small-scale borrowing for productive use.
He stressed that the system will be “well-administered,” aiming to reduce default risks and enhance credit discipline.
Addressing concerns about asset quality in the banking sector, the Governor disclosed that the gross non-performing loan (NPL) ratio remains below 20 percent, while the net figure — excluding fully provisioned loans — is closer to 8 percent.
The central bank has set a deadline of end-2026 for banks to further reduce bad loans and is working closely with institutions to strengthen recovery efforts.
“We don’t just erase fully provisioned loans… because that could create moral hazard,” he cautioned, urging banks to continue pursuing loan recoveries even after provisioning.
External risks remain a major concern, particularly geopolitical tensions in the Middle East. The Governor described the crisis as the “elephant in the room,” warning that prolonged instability could push oil prices above US$120 per barrel — with direct implications for inflation and exchange rates.
Despite earlier disruptions, Ghana’s gold export sector has adapted. Shipments, which slowed briefly due to logistical challenges linked to Middle East trade routes, have resumed following diversification into alternative markets.
“Shipments are ongoing… strategies have been deployed to sustain gold exports,” he confirmed.
On foreign exchange dynamics, the Bank maintained that current pressures are primarily seasonal, driven by dividend repatriations and cyclical corporate demand for dollars.
BoG continues to supply FX through its routine auction system, having pre-announced about US$1 billion for the current month.
“We are not intervening. We are rather building reserves,” the Governor clarified, emphasizing that FX auctions are part of standard market intermediation rather than emergency support.
Gross international reserves have risen to approximately US$14.4 billion, up from US$13.9 billion, reflecting ongoing accumulation efforts.
The Governor noted that Ghana’s relatively stable fuel prices are the result of multiple factors, including exchange rate management, government policy adjustments, and global market trends.
However, he warned that sustained geopolitical shocks could reverse these gains. “If it becomes a permanent situation… we’ll have to look at it again,” he said, hinting at potential price adjustments if global conditions worsen.
The Bank also reaffirmed its commitment to launching Ghana’s first non-interest (Islamic) banking institution, with licensing expected within the year.
He said regulatory frameworks had been strengthened to ensure stability and compliance with global standards.
Beyond this, BoG is positioning Ghana as a regional hub for financial innovation, building on outcomes from its recent 3i (Innovation, Inclusion, Investment) conference.
The initiative aims to harness technology to expand financial access, support SMEs, and enable cross-border trade under frameworks such as AfCFTA.
On the e-Cedi project, the Governor indicated that rollout has been delayed to allow for further piloting and cybersecurity enhancements.
“We haven’t abandoned that project,” he said, adding that current focus includes exploring its use for cross-border payments and digital trade infrastructure.
Looking ahead, the MPC sees risks to the economy as “fairly balanced,” with upside and downside factors evenly weighted. Future policy decisions will depend on incoming data, particularly global economic developments.
While external shocks remain a threat, domestic indicators point to gradual recovery and improved resilience. “The domestic economy is performing quite well,” the Governor concluded, stressing that maintaining stability will be key to unlocking sustained growth.
Source: businesspostonline
