By Adnan Adams Mohammed
The Bank of Ghana (BoG) is walking a tightrope between fostering economic recovery and guarding against inflationary risks.
The delicate balance was the central point of discussion during a high-profile courtesy visit by the Asantehene, Otumfuo Osei Tutu II, to the central bank this week, where he issued a strong plea for immediate action to lower borrowing costs for Ghana’s private sector.
The dialogue between the revered monarch and Governor Dr. Johnson Asiama highlighted the urgent need to translate recent macroeconomic gains into tangible support for businesses struggling under a high-interest-rate environment.
The Asantehene’s Urgent Appeal
While acknowledging recent marginal declines in lending costs, Otumfuo Osei Tutu II stressed that more aggressive action is necessary to spur domestic industry and job creation. He argued that government investment alone cannot guarantee a sound economy and that the onus is now on the private sector to drive growth.
In a blunt appeal to the Governor, the Asantehene demanded a shift in policy focus:
“Let me be as blunt as I can: no amount of investment by government can give us a sound economy. This moment calls for a private push to stimulate domestic industry.”
He continued, urging the central bank to fundamentally change the nation’s credit landscape:
“Move the economy from the crippling high interest rate regime to a level where it becomes a stimulant of business and job creation.”
The message underscores a widely held view among the business community that high borrowing costs are a major impediment to the growth of Small and Medium-sized Enterprises (SMEs).
Governor Asiama’s 10% Ambition
Governor Dr. Asiama received the Asantehene’s call in stride, restating the central bank’s commitment to achieving a more affordable credit environment without jeopardizing the hard-won gains in price stability.
Dr. Asiama pointed to positive indicators, including a historic high in gross international reserves (above $13.8 billion) and a general easing of money market yields. The 91-day Treasury bill rate, for instance, fell significantly from 13.4% in July to 10.3% in August 2025.
He articulated an ambitious target for his tenure:
“I have said on many occasions that my prayer and wish is that by the end of my four-year tenure, lending rates will not be more than 10 per cent.”
The Delicate Balancing Act: A Warning from Deloitte
The conversation about easing rates comes as the financial services firm Deloitte warns that the BoG must proceed with extreme caution. The central bank cut its policy rate by 10 percentage points in 2025, closing the year at 18% per annum, which has helped stabilize the cedi and curb inflation.
Deloitte anticipates further cuts in the policy rate in 2026 but warns against excessive easing:
“While these reductions are anticipated to alleviate financing constraints and stimulate credit and economic demand, excessive easing could risk reversing the progress made in controlling inflation.”
Lending Rates Begin to Shift
The immediate future, however, holds some promise for businesses. Data from the Ghana Association of Banks, effective January 7, 2026, shows a marginal drop in the Ghana Reference Rate (GRR) the benchmark used by commercial banks to price loans—from 15.9% in December 2025 to 15.68%.
This minor decline, alongside recent BoG data showing average lending rates falling from 26.6% to 24.2%, indicates a gradual softening of credit conditions.
As Ghana enters 2026, the BoG is caught between the private sector’s urgent need for affordable credit and the fiscal prudence required to maintain macroeconomic stability, making the trajectory of interest rates the key economic story of the year ahead.
