Central Bank Assures of Lending Rate Decline to Spur Private Sector Recovery Despite Dip in Credit Growth
Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, has expressed optimism about a rebound in private sector activity, buoyed by expected declines in lending rates and improved macroeconomic stability, even as data points to a downward trend in credit growth.
Speaking at the 124th Monetary Policy Committee (MPC) press briefing, Dr Asiama highlighted signs of recovery in private sector credit and underscored the Bank’s commitment to creating a conducive interest rate environment to support growth.
“Private sector credit, you know as well, is recovering. Growth is quite strong. One of the things that we were happy to look at was the reference rates, which is computed by the Ghana Association of Banks. You will notice that the major part of their reference rates has come down significantly,” he noted.
Dr Asiama stated that the BoG expects a further decline in lending rates going forward, describing it as a “key way to support the private sector.” He also pointed to exchange rate stability as a complementary factor that could boost private sector activity and overall economic growth.
“So going forward, we expect to see some movement—some decline—in the lending rate. That is a key way to support the private sector. And of course, trends in the local currency will also support private sector growth and therefore overall growth in the economy. So rest assured we are on course,” he added.
Despite the optimism, recent data released in the BoG’s May 2025 Summary of Economic and Financial Data indicates a steady decline in private sector credit growth over the past four months.
Nominal private sector credit growth stood at 19.9% at end-April 2025, down from 24.3% in March, 26.9% in February, and 29.4% in January.
Real private sector credit growth, which adjusts for inflation, similarly declined, falling from 4.8% in January to 3.1% in February and 1.6% in March, before entering negative territory at -1.1% in April 2025.
Analysts say the negative real growth figure for April suggests that the pace of credit expansion is not keeping up with inflationary pressures, thereby limiting the purchasing power of businesses seeking credit for expansion.
Nonetheless, the Central Bank remains confident that with easing reference rates and sustained macroeconomic stability, lending rates will decline sufficiently to stimulate private investment and drive economic recovery.
