The Governor of the Bank of Ghana (BoG), Dr. Johnson P. Asiama, has urged banks to moderate their interest rate adjustments and ensure credit flows to viable businesses, particularly those in vulnerable sectors. Despite the current tightening of monetary policy, he emphasized the need for banks to balance prudence with continued support for the economy. His message was delivered during the BoG’s first post-Monetary Policy Committee (MPC) meeting under his leadership, following the MPC’s decision to raise the policy rate by 100 basis points to 28%.
Addressing Challenges Amid Higher Borrowing Costs
Dr. Asiama’s remarks come as businesses face increased borrowing costs due to the recent policy rate hike. He acknowledged that the rise in the policy rate could constrain business activity but urged banks to avoid automatically passing on these higher costs to borrowers. Instead, he encouraged banks to find ways to maintain credit support for sectors essential to economic recovery.
“The financial system is robust enough to withstand this adjustment,” Dr. Asiama stated, reassuring the banking sector of its ability to adapt to the policy changes. He also emphasized the importance of transparent communication between banks and clients, ensuring that businesses in vulnerable sectors continue to access the credit they need to thrive.
Recent Credit Growth and BoG’s Reforms
Dr. Asiama highlighted that banks had already demonstrated a softer approach to lending. The Ghana Reference Rate for April 2025 stood at 23.99%, signaling a more cautious lending environment. Private sector credit growth also showed a positive rebound, rising by 26.9% in February 2025 compared to just 5.1% in February 2024. This growth was further supported by a real credit increase of 3.1%, marking a significant recovery from the previous year’s contraction of 14.7%.
The Governor’s comments also came at a time when Ghana’s financial sector is still recovering from the banking sector cleanup and the Domestic Debt Exchange Programme (DDEP). While commending banks for their resilience, Dr. Asiama acknowledged that some aspects of these reforms could have benefitted from better foresight and consultation. However, he stressed that the focus now should be on collaboration between banks and regulators to rebuild public confidence and support inclusive economic growth.
BoG’s Commitment to Strengthening the Financial Sector
According to Dr. Asiama, there are signs of recovery within the financial sector. As of February 2025, total banking assets had grown by 34.05% year-on-year, while deposits increased by 27.89%. The Capital Adequacy Ratio (CAR) stood at 14.35%, well above the 10% regulatory minimum, indicating a strong financial foundation. However, risks still remain, particularly in some domestically controlled and state-owned banks, where recapitalization efforts are still underway to address capital shortfalls.
The Governor also noted that non-performing loans (NPLs) remained a challenge, with the gross NPL ratio at 22.57%. Although legacy exposures have contributed to this figure, Dr. Asiama called for stronger credit risk management and underwriting standards to address the issue.
Fostering Innovation and Digital Transformation
Dr. Asiama further encouraged traditional banks to adopt innovative solutions and respond more agilely to emerging challenges. However, he warned that digital transformation must be pursued with caution, as operational and cyber risks have increased. A recent BoG report revealed a 5% rise in fraud incidents and a 13% increase in the value at risk, highlighting the need for banks to strengthen internal controls and bolster cyber resilience.
He also emphasized the importance of complying with anti-money laundering (AML) and counter-terrorist financing standards, warning that any failure in this regard could damage Ghana’s global financial reputation and limit access to international markets.
Preparing for Future Risks and Strengthening Governance
The BoG is enhancing its supervisory capabilities to keep pace with emerging challenges. Dr. Asiama revealed that a new Resolvability Assessment Framework is being developed to improve crisis preparedness. Supervisors are also being trained in areas such as artificial intelligence, climate risk, and geopolitical instability. In line with this, he hinted that mandatory Basel III and IV training for bank board members might be introduced to strengthen governance and regulatory compliance.
Dr. Asiama also called for banks to play a more significant role in regional integration efforts, particularly through the Pan-African Payment and Settlement System (PAPSS), which could improve transaction efficiency and enhance Ghana’s export competitiveness within the African Continental Free Trade Area (AfCFTA).
Commitment to Inclusive Growth
“Financial institutions like yours are essential to Ghana’s economic growth,” Dr. Asiama stated, reiterating that banks must work closely with the central bank to ensure a resilient, inclusive, and future-ready financial system. He emphasized that sustainable banking requires strong governance at its core, with ethical and inclusive practices being key to the long-term success of Ghana’s economy.
In closing, Dr. Asiama reaffirmed the BoG’s commitment to six key policy priorities: exchange rate stability, inflation control, financial inclusion, crisis preparedness, innovation, and regional integration. He urged banks to partner with the BoG to rebuild public trust and support inclusive economic growth in Ghana.
Moving Forward
As the financial sector continues its recovery, the challenge for banks will be to balance risk management with the need to support key sectors in the economy. Dr. Asiama’s message sets the tone for a more cautious yet supportive approach in the face of ongoing economic challenges. The Bank of Ghana’s leadership is committed to working alongside commercial banks to create a stable financial environment that supports sustainable growth.
