Economic Overview
The Ghanaian economy has shown significant improvement, with the cedi appreciating by over 40% against the US dollar this year. This development, coupled with improved reserves of US$11.1 billion by the end of June, has created a favorable environment for commercial banks to expand their lending activities. The country’s inflation rate has also dropped to 12.1% in August, the lowest in nearly four years.
Monetary Policy and Banking
The Bank of Ghana has cut its policy rate by 300 basis points to 25% in July, signaling a shift from a defensive stance to one that supports growth. According to the Bank of Ghana Governor, Dr. Johnson P. Asiama, there is scope for further easing if economic conditions continue to improve. The banking sector remains well-capitalized, liquid, and profitable, with non-performing loan ratios falling due to improved macroeconomic conditions and better credit underwriting.
Economic Growth and Development
The economy expanded by 5.3% in the first quarter of 2025, with non-oil GDP growing by 6.8% driven by agriculture and services. The Composite Index of Economic Activity grew by 4.4% in May, indicating resilience in consumption, trade, construction, and tourism. The fiscal deficit stood at 0.7% of GDP in the first half, below the target of 1.8%, while public debt levels declined.
Regulatory Measures and Lending
Dr. Asiama urged banks to align their lending strategies with productive sectors of the economy, particularly small- and medium-sized enterprises, while maintaining sound risk management. The Bank of Ghana plans to roll out new regulatory measures to reinforce sector resilience and align with international standards. The regulator is also tightening enforcement of foreign exchange rules, including mandatory weekly inward remittance reports and a ban on unapproved FX practices. Failure to comply will attract sanctions under banking and payment systems laws.
Lending Rates and Challenges
Lending rates in Ghana remained elevated in June, with sharp disparities across borrower categories and loan maturities. The challenge for banks is to grow lending while preserving the hard-earned stability that now defines the financial system. The Governor emphasized the need for banks to balance their lending activities with sound risk management practices.
Conclusion
In conclusion, the Ghanaian economy has made significant progress, with improved macroeconomic conditions creating a favorable environment for commercial banks to expand their lending activities. The Bank of Ghana’s regulatory measures and monetary policy stance are aimed at supporting growth while maintaining stability in the financial system. As the economy continues to grow, it is essential for banks to align their lending strategies with productive sectors and maintain sound risk management practices to ensure sustainable development.
