The Ghana Association of Banks (GAB) has highlighted rising public debt obligations as a key challenge for the domestic banking sector, urging banks to recalibrate credit portfolios to support productive sectors while managing risk.
According to the GH Bankers’ Voice 2025, 5th Edition, fiscal consolidation has improved Ghana’s primary balance from a deficit of 1.2% in 2024 to a surplus of 0.3% by March 2025, and narrowed the overall deficit from 5.2% to 1.0%.
Public debt, while increasing in absolute terms, declined as a share of GDP from 61.8% to 55%. However, debt service obligations are expected to exceed GH¢50 billion annually by 2027–2028, highlighting ongoing sustainability risks.
In response, GAB recommends that banks rebuild credit portfolios to align with Ghana’s growth priorities. Lending should expand to Small and Medium Enterprises (SMEs), agribusiness, and export-oriented ventures, sectors identified as vital for job creation and economic transformation.
The association also advises banks to explore innovative risk-sharing mechanisms, including blended finance instruments, public-private co-financing arrangements, and guarantee schemes to reduce exposure to economically strategic but vulnerable sectors.
Collaborations with development finance institutions and impact investors are encouraged to unlock concessional capital and broaden market participation.
The report emphasizes that banks must strengthen capital buffers, improve liquidity management, and optimize treasury portfolios, especially given significant sovereign exposure.
Dynamic portfolio strategies such as staggered maturities, coupon reinvestment, and yield curve tracking are highlighted as critical tools for managing correlated risks between fiscal policy and bank balance sheets.
GAB further calls for proactive policy and regulatory engagement, urging banks to contribute to dialogues on capital adequacy, digital banking regulation, green finance, and financial inclusion, to build a more resilient and coherent financial ecosystem.
