The International Monetary Fund (IMF) has admonished the Bank of Ghana (BoG) to tread carefully on further easing of the policy rate, emphasizing the need for a data-driven approach.
“With inflation pressures subsiding and the recent appreciation of the Cedi, the Bank of Ghana has appropriately begun a cautious monetary easing cycle. Any further easing should remain gradual and data-dependent,” the IMF said in its Staff Review of Ghana’s Bailout Programme.
Since January 2025, the BoG has cut the policy rate by 9 percentage points to 18%, aiming to spur economic growth. BoG Governor Dr. Johnson Asiama remains committed to pushing lending rates down to 10% by the end of his tenure, believing it’s crucial for unlocking private-sector growth.
“We are doing everything we can to make sure we achieve it,” Dr. Asiama said, noting that average lending rates have fallen from 32% to 21% within the year. The Ghana Reference Rate (GRR) has also dropped from 29.72% in January to 17.86% in October 2025, signalling improved liquidity.
However, the IMF warns that further easing should be gradual, citing the need to balance promoting economic growth with curbing inflation pressures.
“Lower rates mean stronger businesses, more jobs, and faster economic growth,” Dr. Asiama said, emphasizing the importance of reducing credit costs for Ghana’s economic recovery.
Addressing journalists after the 127th Monetary Policy Committee (MPC) meeting, Dr. Asiama acknowledged that the cost of borrowing remains high, but recent data shows “undeniable progress” with average lending rates falling sharply from about 32 percent to 21 percent within the year.
“I’ve said before that I want to see average lending rates at 10% by the end of my tenure and I still stand by that. We are doing everything we can to make sure we achieve it,” he said.
Describing the current average lending rate of 21–22 percent as progress, he however noted that more needs to be done to bring it lower for an economy seeking faster private-sector growth.
“It may not be exactly what we intended by this time, but a lot of progress has been made,” he noted.
He added that as Treasury bill yields continue to fall, commercial banks will be forced to lend more aggressively, paving the way for even sharper declines in lending rates.
Latest figures from the Bank of Ghana’s November 2025 Summary of Economic and Financial Data confirm that the average lending rate dropped to 22.22 percent in October, down from 30.07 percent in January — a decline of more than 7 percentage points.
The month-by-month data underscores the steady improvement:
• 30.12% in February
• 29.18% in March
• 27.40% in April
• 26.90% in May
• Slight rise to 27.00% in June
• Continuous declines afterward
Despite the broad decline, the Governor noted stark variations in the cost of credit. While some banks price loans around the GRR, others charge as high as 39 percent, depending on borrower risk profiles.
Meanwhile, in collaboration with the Fund, BoG has developed and implemented a new structured foreign exchange operations framework to intermediate FX flows and smooth excessive market volatility, while accumulating international reserves.
The Fund said “The authorities have taken decisive steps to safeguard financial stability, including by implementing the strategy to restructure and reform state-owned banks, closing gaps in the crisis management and resolution framework, and pursuing a multi-pronged approach to reduce non-performing loans”.
The Bretton Woods institution further pointed out that the authorities have taken decisive steps to safeguard financial stability, including by implementing the strategy to restructure and reform state-owned banks, closing gaps in the crisis management and resolution framework, and pursuing a multi-pronged approach to reduce non-performing loans.
It added that important progress has been made to strengthen Ghana’s governance and public sector efficiency in line with the recently published Governance Diagnostic Assessment report, highlighting, that efforts to improve transparency and oversight need to continue, particularly related to public disclosure requirements and management of State-Owned Enterprises in the gold, cocoa, and energy sectors.
It stressed that ambitious structural reforms to help create an environment more conducive to private sector investment, and to enhance governance and transparency remain key to boosting the economy’s potential and underpinning sustainable job creation.
By Adnan Adams Mohammed
