Ghana’s central bank is pointing to internal banking dynamics, risk pricing, and structural adjustment delays to explain why businesses are still paying relatively high interest on loans, even as headline market rates fall sharply across the economy.
Over the past year, Ghana’s financial conditions have eased significantly. The 91-day Treasury bill rate has fallen to 4.9% in April 2026 from 15.5% a year earlier, while the Ghana Reference Rate has dropped to 10.06% from 23.99%. Average lending rates have also declined, easing to 16.3% from 27.4%.
Inflation, too, has remained subdued, recording 3.4% in April 2026 compared with 3.2% in March, with core inflation trending lower, signalling reduced underlying price pressures.
Yet the cost of credit at the level of firms has not adjusted at the same pace.
At the Bank of Ghana’s 130th Monetary Policy Committee briefing, the Governor said the disconnect is largely due to how commercial banks adjust their balance sheets after shifts in the interest rate environment.
He said the current low-rate environment is still relatively new for banks, meaning transmission is not immediate.
“When the interest rates are falling, it may take a while… remember the low interest regime we are having currently is quite new to the banks,” he said.
According to him, banks require time to reprice assets, adjust risk models, and shift their loan portfolios, which slows down how quickly lower policy conditions reach borrowers.
A second layer, he noted, is the structure of credit demand itself. Even as liquidity improves, lending is constrained by the availability of viable projects that meet commercial bank risk thresholds.
“You don’t just rush into giving out loans… there has to be bankable adequate projects… you don’t compromise your credit appraisal standards,” the Governor said.
The central bank also highlighted that the banking system is still operating through a period of adjustment, where risk pricing remains elevated despite improving macro indicators.
Private sector credit has expanded strongly, rising 28.7% in nominal terms in April 2026 compared with 19.9% a year earlier, but officials say the composition of lending still reflects selective risk exposure rather than broad-based easing.
At the same time, the Bank of Ghana is continuing liquidity management reforms, including a reduction in the cash reserve ratio to a uniform 20% effective June 2026, aimed at improving transmission over time.
The central bank maintains that the direction of travel is clear: inflation is easing, rates are falling, and credit is expanding. But internally, the system is still adjusting to a new pricing environment where banks are recalibrating risk, liquidity, and profitability at different speeds.
For businesses, that adjustment gap is what continues to keep borrowing costs higher than headline indicators suggest.
