Despite a recent hike in the Monetary Policy Rate (MPR) to 28 percent, the Bank of Ghana (BoG) has reassured commercial banks of its support for inclusive growth and sector reforms. Dr. Johnson P. Asiama, the BoG Governor, urged banks to moderate the pace of interest rate adjustments and sustain credit flow to viable enterprises, particularly those in vulnerable sectors. The decision to increase the policy rate by 100 basis points was aimed at accelerating a disinflation process that has remained sluggish. However, Dr. Asiama acknowledged that this rate hike could heighten borrowing costs and constrain business activity. He emphasized the need for banks to balance prudence with support for sectors essential to economic recovery. “The financial system is robust enough to withstand this adjustment,” Dr. Asiama stated. “We cannot change the past, but we can learn from it. We must rebuild public confidence and drive inclusive economic growth.”

Reforms and Recovery

The BoG Governor highlighted ongoing reforms in the financial sector, which continue to recover from two major disruptions – the banking sector clean-up and Domestic Debt Exchange Programme (DDEP). While commending banks for their resilience and professionalism, Dr. Asiama acknowledged that aspects of both interventions could have benefited from better foresight and consultation. Banks have demonstrated a softer stance toward lending, as evident from the Ghana Reference Rate for April 2025, which stands at 23.99 percent. Private sector credit has recorded an annual growth of 26.9 percent, a significant rebound from 5.1 percent in February 2024.

The BoG reported that as of end-February 2025, total banking assets had grown by 34.05 percent year-on-year, while deposits increased by 27.89 percent. The Capital Adequacy Ratio (CAR) stood at 14.35 percent, well above the 10 percent regulatory minimum.

Challenges and Priorities

Despite the positive signs, risks persist, particularly regarding Solvency challenges in some domestically controlled and state-owned banks. The BoG is engaging these institutions to address capital shortfalls, ensure compliance with prudential standards, and restore depositor trust. Non-performing loans (NPLs) remain elevated, with the gross NPL ratio at 22.57 percent. Asiama emphasized the need for stronger credit risk management and underwriting standards.

• Operational and cyber risks have intensified.
• Failure to comply with anti-money laundering (AML) and counter-terrorist financing standards can attract reputational damage and limit Ghana’s access to global financial markets.

The BoG is enhancing its supervisory capabilities to address emerging challenges. A new Resolvability Assessment Framework is in development to improve crisis preparedness. Supervisors are being trained in areas such as artificial intelligence, climate risk, and geopolitical instability.

Future-Ready Financial System

Dr. Asiama emphasized the need for banks to deepen their support for trade finance and regional integration, particularly through platforms like the Pan-African Payment and Settlement System (PAPSS). He highlighted the importance of sustainable banking, which requires strong governance at the core. “Sustainable banking requires strong governance at the core,” Dr. “Ethical and inclusive banking is essential to Ghana’s long-term economic trajectory.”

Call to Action

Dr. Asiama reaffirmed the BoG’s commitment to its six policy priorities – including exchange rate stability, inflation control, financial inclusion, and crisis preparedness. He called on banks to partner with the central bank in delivering a resilient, inclusive, and future-ready financial system. “Financial institutions like yours are essential to Ghana’s economic growth,” Dr. Asiama said. “Together, we must rebuild confidence and position the sector to support inclusive growth.”

Closing Remarks

Dr. Asiama concluded his address by emphasizing the importance of collaboration between banks and regulators to drive inclusive economic growth. He urged banks to pursue digital transformation with discipline, while reaffirming the BoG’s commitment to creating a level playing field that balances innovation with consumer protection. “Digital transformation must be pursued with discipline,” Dr. Asiama warned. “We must strengthen internal controls and cyber resilience to mitigate operational and cyber risks.”

Quoted Section

“Digital transformation must be pursued with discipline. We must strengthen internal controls and cyber resilience to mitigate operational and cyber risks. A recent BoG report revealed a 5 percent increase in fraud incidents and 13 percent rise in value at risk, reinforcing the need for banks to strengthen internal controls and cyber resilience.” – Dr.