- Bank of Ghana flags firmer recovery as inflation falls and cedi strengthens
Ghana’s post-crisis recovery is moving onto firmer ground, the Bank of Ghana said on Monday, citing faster growth, receding inflation and a sturdier currency as signs that macro stability is taking hold. Opening the 126th Monetary Policy Committee meetings on Monday, September 15, Governor Dr. Johnson P. Asiama said, “Ghana’s recovery is gaining momentum even as the global environment remains uncertain,” noting that domestic “improved fundamentals have strengthened confidence in our outlook.”
Provisional data show real activity picking up speed: GDP growth accelerated to 6.3 per cent in the second quarter, led by services and agriculture, with non-oil output up 7.8 per cent. High-frequency gauges echo the turn, with the Bank’s Composite Index of Economic Activity up 6.1 per cent year-on-year in July and business surveys pointing to better sentiment.
The most visible progress, however, is on prices. Headline inflation fell to 11.5 per cent in August, its lowest since October 2021. “Headline inflation fell further to 11.5 percent in August… supported by a tight monetary stance, fiscal consolidation, and better food supplies; core measures and expectations continue to re-anchor,” Dr. Asiama said.
Those gains allowed the MPC in July to trim the policy rate by 300 basis points to 25 per cent. Yet the Bank is signalling vigilance rather than victory. With possible utility tariff adjustments ahead and an unsettled global backdrop, the Governor stressed the path of policy would remain data-dependent. “The MPC… reduced the policy rate… to 25.0 percent, while reiterating our readiness to adjust as the disinflation process evolves and risks, such as global trade disruptions or prospective utility tariff adjustments, are assessed,” he pointed out.
External buffers have been rebuilt at pace, aided by export performance. “For the first eight months of the year, Ghana recorded a trade surplus of US$6.2 billion, underpinned by robust gold exports and higher cocoa receipts. Gross international reserves stood at US$10.7 billion in August, covering about 4½ months of imports,” according to the Governor of the Central Bank of Ghana.
That stronger cushion has fed through to the currency. Despite seasonal pressures and softer remittances in recent weeks, “the cedi remains among the strongest currencies globally year-to-date, appreciating by about 21 percent as of September 12,” the Governor added, ranking it alongside the Russian rouble, Swedish krona, Norwegian krone, Swiss franc, euro and pound. Crucially, the Bank is positioning the currency’s outperformance as policy-led rather than speculative: “This outperformance reflects prudent monetary policy, effective liquidity management, fiscal consolidation, and increased foreign-exchange inflows.”
Financial-sector indicators, while not without blemish, point to incremental healing. The capital adequacy ratio—excluding reliefs, rose to 19.5 per cent in July. Headline non-performing loans remain high at 21.7 per cent but fall to 8.4 per cent once fully provisioned losses are excluded. The Governor framed the gap as evidence of underlying resilience “as recapitalisation and strict underwriting continue”, even as banks navigate legacy stresses and a gradually normalising credit cycle.
On the fiscal side, execution in the first half of 2025 “signalled consolidation”. The deficit on a commitment basis was contained at 0.7 per cent of GDP, below target, helping, alongside the firmer cedi and external debt operations, to lower the public-debt ratio by mid-year. Follow-through will be critical: sustaining the disinflation glide path and the cedi’s strength will depend on steady fiscal discipline, durable export and FDI inflows, and an orderly yield-curve environment that does not crowd out private credit.
For markets, the message is cautious optimism. Inflation is retreating, the currency is stronger and reserves are thicker; growth is broadening beyond hydrocarbons. The near-term tests are clear: how quickly lower policy rates filter through to lending costs; whether risk appetite improves as NPLs normalise; and how Ghana weathers any imported inflation from global trade frictions or domestic price adjustments.
Dr. Asiama’s closing note underscored the hierarchy of objectives: “Our commitment remains firm: maintain price stability, safeguard financial stability, and create the conditions for inclusive, sustainable growth.”
After a long stretch of strain, the BoG enters its policy week with the wind at its back. Converting this moment into durable gains will hinge on staying orthodox when it is tempting to relax, and on ensuring that today’s stronger buffers become tomorrow’s investments, jobs and incomes.
