The Bank of Ghana has raised concerns about the banking sector’s ability to expand lending effectively, even as the economy records improving macroeconomic conditions and stronger financial indicators.
Governor Dr. Johnson Pandit Asiama opened the 130th Monetary Policy Committee (MPC) meeting by signalling a shift in the central bank’s focus, from macroeconomic stabilisation toward whether financial sector improvements are actually flowing through to productive lending and broader economic growth.
“The economy will need a strong banking sector,” Dr. Asiama said, stressing that the banking system must deliver on credit expansion.
Recent data from the Bank of Ghana’s March 2026 Monetary Policy Report reveal a troubling concentration in banks’ investment behaviour. Treasury bills accounted for 65.0 percent of banks’ investment portfolios in February 2026, up sharply from 44.5 percent a year earlier. Long-term securities, by contrast, fell to 34.5 percent from 55.1 percent over the same period, pointing to a strong preference for shorter-duration assets despite an improving macroeconomic environment.
Credit growth is also slowing. Gross loans and advances grew by 15.6 percent to GH¢108.2 billion in February 2026, well below the 25.2 percent expansion recorded a year earlier. Private sector credit rose 18.7 percent to GH¢103.7 billion, compared with 26.9 percent growth in February 2025. Public sector credit contracted sharply by 27.8 percent to GH¢4.6 billion, reducing its share of total industry credit to 4.2 percent from 6.8 percent. The private sector consequently held 95.8 percent of total credit. The services sector led recipients at 36.7 percent, followed by commerce and finance at 23.0 percent and manufacturing at 11.0 percent.
On a brighter note, asset quality improved. The central bank reported declines in both the stock of non-performing loans (NPL) and the industry NPL ratio in February 2026 compared with the previous year.
Dr. Asiama described the economy as having improved meaningfully since the March MPC meeting, supported by reforms, stronger external buffers and renewed investor confidence. Ghana’s current account surplus in the first quarter of 2026 exceeded the same period in 2025 by US$652 million, and the successful issuance of a seven-year domestic bond pointed to improving market confidence.
However, the governor cautioned that the prolonged Middle East conflict, rising global energy prices and domestic energy supply disruptions are creating new inflation risks. Headline inflation rose for the first time since December 2025, and elevated business costs could weaken inflation expectations if not carefully managed.
The governor tied future banking sector reforms to Ghana’s proposed 36-month non-financing Policy Coordination Instrument with the International Monetary Fund (IMF), which will include measures to improve monetary policy transmission, liquidity forecasting and the inflation-targeting framework.
