The Bank of Ghana has urged commercial banks to increase lending to the private sector, expressing concerns about the effectiveness of monetary policy in driving credit growth. Governor Dr. Johnson Pandit Asiama stated that policymakers will evaluate whether current monetary conditions adequately influence lending rates and credit expansion. This focus comes despite Ghana's economy showing strengthening macroeconomic conditions and better financial sector indicators.
This shift reflects the central bank's growing attention from broad economic stability towards translating financial sector gains into productive lending. The Bank of Ghana's March 2026 Monetary Policy Report indicates that banks heavily favour short-term government bills. These bills made up 65.0 percent of banks’ investment portfolios in February 2026, a sharp rise from 44.5 percent a year earlier. In contrast, long-term securities declined to 34.5 percent from 55.1 percent in the same period, showing a preference for shorter-duration assets. This preference exists even with an improving economic climate.
This trend hinders the flow of funds to businesses, potentially slowing overall economic growth. Ghana's economy has recovered significantly, supported by reforms and stronger external buffers. The current account surplus in the first quarter exceeded the same period in 2025 by US$652 million. A successful seven-year domestic bond issuance also signals improving market confidence. However, the concentration in government securities limits the credit available for productive sectors of the economy.
Governor Asiama emphasized the need for a strong banking sector that delivers on credit expansion. He noted that the economy has improved “meaningfully” since the last Monetary Policy Committee meeting in March. He stated, “The economy will need a strong banking sector…and that the banking system is made to deliver on credit expansion.” He added that financial stability concerns must continue to be addressed.
Gross loans and advances grew by 15.6 percent to GHS 108.2 billion in February 2026. This is slower than the 25.2 percent growth seen a year earlier. Private sector credit increased by 18.7 percent to GHS 103.7 billion, compared to 26.9 percent growth in February 2025. Public sector credit contracted by 27.8 percent to GHS 4.6 billion, reducing its share of total credit to 4.2 percent. The private sector’s share of total credit thus increased to 95.8 percent.
The services sector received the largest share of credit at 36.7 percent, followed by commerce and finance at 23.0 percent. Manufacturing held an 11.0 percent share. Despite moderate credit growth, the banking sector's asset quality improved, with declines in non-performing loans. Dr. Asiama also linked future banking sector reforms to Ghana’s proposed Policy Coordination Instrument with the International Monetary Fund. This instrument will include measures to enhance monetary policy transmission, liquidity forecasting, and the inflation-targeting framework. The central bank continues to monitor external factors, such as the conflict in the Middle East and rising global energy prices, which could introduce new inflation risks.