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Tag: Johnson Asiamah

  • Governor Asiama optimistic of private sector credit rise

    Governor Asiama optimistic of private sector credit rise

    Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, has said that the central bank is optimistic that private sector credit will begin to rise.

    He has pointed out that although a decline in private sector credit is not new, the BoG has taken measures to address the situation.

    He said this at the 125th Monetary Policy Committee (MPC) press conference, when his attention was drawn to the fact that there has been a consistent decline in real private sector credit since the beginning of the year.

    Asked what accounted for this trend, Governor Asiama said that “Indeed, this trend is not entirely new. In fact, when you examine private sector credit as a percentage of GDP and compare Ghana to its peers within the sub-region, we appear to be lagging.

    “This reality is behind the initiatives we have undertaken since I assumed office. Our objective is to transition into a regime where credit becomes a central focus for banks. As financial intermediaries, their core function is to mobilise funds from savers and channel them to productive users. Based on the data available to me, we are making steady progress toward that goal.

    “We are optimistic that private sector credit will begin to rise. As that happens, we expect further declines in inflation. Treasury bill rates have already started to fall, and as inflation continues a downward trajectory, the Monetary Policy Committee has indicated its readiness to adjust the policy rate accordingly.”

    In the area of non-performing loan (NPL) ratios, Dr Asiama stated that as part of efforts to address the rising trend, commercial banks have been directed to strengthen their credit administration systems.

    Dr. Asiama noted that soon, banks will need to rely more on the performance of their loan portfolios to sustain returns.

    He disclosed that the NPL ratio currently stands at 23.1 percent, a level that requires continuous supervisory attention.

    When asked what accounted for the figure and what measures were being taken to address it, Dr. Asiama said:

    “We have been actively working to address the issue of high non-performing loans. As I mentioned in my opening remarks, the current level of NPLs remains a concern. In response, we have recently issued new regulatory notices to banks aimed at tackling this challenge.“

    He explained that the Bank of Ghana’s goal is not only to reduce NPLs but also to strengthen credit administration frameworks within banks. This, he stressed, is crucial as the economy transitions away from persistently high interest rates.

    Currently, he observed, Bank of Ghana bills provide attractive returns, enabling banks to invest and report strong bottom lines. However, this phase, he cautioned, is nearing its end.

    “Soon, banks will need to rely more heavily on the performance of their loan portfolios to generate returns. This makes it imperative for them to enhance credit administration and reduce NPLs in order to sustain profitability in the evolving financial landscape,” Dr. Asiama added.

  • BoG data projects strong economic growth in 2025


    BoG projects stronger economic growth in 2025.

    By Toma Imirhe

    Early data for 2025 from the Bank of Ghana suggests that the surprisingly strong economic growth Ghana achieved in 2024 will continue this year.

    Data released at the latest Monetary Policy Committee press briefing at the end of March reveals that the first two months of this year have recorded increased economic activity, improved sentiments by both consumers and businesses as well as a build-up in business inventories. The central bank’s real sector indicators point to a sustained improvement in economicactivity, amid significantly improved business and consumer sentiments.

    The updated Composite Index of Economic Activity (CIEA) rose by 5.7% year-
    on-year in January 2025, relative to 1.1% in December and 3.5% in January 2024, driven
    by increased consumption, international trade activities, and private sector credit
    growth. The CIEA measures economic activity, which is different from the Ghana Statistical Service’s measure of changes in economic output (Gross Domestic Product growth) but since economic activity is directly related to economic output, both measures tend to correlate with each other, loosely at least.

    The BoG’s latest consumer confidence survey puts the index at 100.2 in February this year, up from 90.2 in December last year and 92.0 in February 2024. Similarly, the business confidence survey’s index reached 99.7 in February this year, up from 96.0 a year earlier. The index stood at 96.6 in December last year.

    Enthused BoG Governor, Dr Johnson Asiama: “The confidence surveys conducted in February 2025 showed significantimprovement in both consumer and business sentiments, buoyed by expectations for an improved macroeconomic environment”.

    Added to all this, the Ghana Purchasing Managers’ Index moved above the 50-benchmark in February, implying increases in new orders by companies. The PMI measures the level of inventory holdings by businesses and an increase in the index indicates a build-up in inventory levels in anticipation of increased production and sales.

    Ghana’s economic growth continued to rebound in 2024, exceeding initial expectations. Provisional data from the Ghana Statistical Service estimated real GDP growth at 5.7% in 2024, higher than the programmed growth rate of 4.0% for 2024, and the 3.1% recorded in 2023. Non-oil GDP grew at 6.0% compared with 3.6% recorded in 2023.

    However, the President John Mahama administration has targeted growth of at least 4.0% for 2025, a target which the Parliamentary opposition has criticized as being too low, compared with the growth rate it left last year.

    But the latest data from the BoG suggests that economic growth this year could match or even exceed last year’s performance if the early year trends continue over most of the rest of the year. Already, commercial banks are showing a willingness to increase their credit to the private sector in the face of treasury bill rates turning negative and loan quality starting to improve.

    In February 2025, private sector credit recorded 26.9% annual growth, compared with 5.1% in February 2024. In real terms, credit growth was 3.1%, compared with a decline of 14.7% in February 2024.

    Strong economic growth prospects have encouraged the BoG to focus on dragging down inflation – which has stubbornly stuck at just over 23% for several months now – through monetary tightening in the form of a 100 basis points rise in the Monetary Policy Rate to 28%.

    However Ghana’s forecasted strong growth for 2025 faces headwinds from global events in the form of the evolving global trade war instigated by America’s President Trump administration last week and restrictive monetary policy as central banks around the world slow the pace of monetary easing in response to the stalling of disinflation.

    “The persistence of these external headwinds may spill over to the domestic economy through the trade and financial channels, highlighting the need for policy to remain proactive” warned Dr Asiama although “both business and consumer confidence have improved, and private

    sector credit growth is recovering, suggesting a positive outlook for the economy”.

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