The Bank of Ghana (BoG) has reported a sharp 41% year-on-year expansion in credit extended to businesses and households, a figure that Governor Dr. Ernest Addison described as “a clear signal of renewed economic confidence” and a direct result of recent monetary policy adjustments.
Speaking at the central bank’s quarterly press briefing on Thursday, Dr. Addison revealed that total private sector credit stock rose to GH¢78.4 billion in June 2026, up from GH¢55.6 billion during the same period last year. The surge marks the fastest growth rate in over five years, surpassing the central bank’s own projections.
Drivers of the Spike
The Governor attributed the jump to three key factors:
· Policy Rate Cuts: The BoG has slashed its benchmark interest rate by 250 basis points since January, bringing it to 18% – the lowest since 2021. This has lowered commercial lending rates, making loans more affordable for small businesses and mortgage seekers.
· Fiscal Stability: A sustained drop in inflation – now at 12.4% – and a stable cedi have given banks the confidence to lend more aggressively, rather than hoarding Treasury bills.
· Sectoral Demand: The agricultural and manufacturing sectors accounted for nearly half of the new credit, driven by government-backed input subsidies and a rebound in cocoa exports.
Household Borrowing Rises
Credit to households grew by 37%, driven largely by auto loans and housing mortgages. “We are seeing a shift from consumption loans to long-term asset-building,” Dr. Addison noted, adding that non-performing loans (NPLs) have actually dropped to 11.2%, suggesting borrowers are repaying on time despite the higher debt burden.
Cautious Optimism Amid Risks
While the numbers are promising, the Governor warned that the pace of expansion could test bank liquidity. He urged lenders to “maintain prudent risk assessment” and not repeat the aggressive lending that led to the 2018 banking sector crisis.
Economic analysts welcomed the data but expressed caution. “A 41% jump is impressive, but it is coming from a low base,” said Dr. Kofi Amoah, an economist at the University of Ghana. “We need to see if this translates into real investment and job creation over the next 12 months.”
Market Reaction
The Ghana Stock Exchange (GSE) ended the day up 1.2%, with banking stocks leading the rally. The cedi remained flat against the dollar, signaling that investors view the credit expansion as supportive of growth rather than inflationary.
Outlook
The BoG projects credit growth to moderate to 28–30% by year-end as base effects fade. However, Dr. Addison reaffirmed that the central bank stands ready to intervene if inflation shows signs of ticking back up.
The 41% surge comes ahead of the government’s mid-year budget review, where Finance Minister Ken Ofori-Atta is expected to announce new stimulus measures for SMEs – a sector that accounted for 60% of the new business loans.
