At the same time as the coun- try’s macroeconomic recovery, the Bank of Ghana (BoG) has embarked on a wide-ranging series of reforms, particularly in the microfinance, rural and community banking segments, aimed at strengthen- ing the sector for the long term.

High levels of inflation and govern- ment debt triggered a sovereign debt default in December 2022, with a $3bn three-year IMF bailout needed in May 2023 to stabilise government finances and keep the economy afloat.

The disruption caused by the 2022 Do- mestic Debt Exchange Programme, which offered holders of government bonds the option to exchange them for new bonds under revised terms, hit bank balance sheets and exposed variable asset quality. Ghanaian banks responded by rebuilding capital buffers, tightening credit stand- ards and improving loan monitoring.

When President John Mahama of the National Democratic Congress came to power in January 2025, the government embarked on a strategy of deep-seated economic reforms. Cassiel Ato Forson, the Minister of Finance, said that “shock therapy” was needed to tackle an econo- my “in severe distress, burdened by debt repayment humps, mismanagement and a lack of accountability”.

The government reforms have included cutting expenditure, debt restructuring to reduce the repayment burden, tighten- ing public procurement procedures and working to cut inflation. It has also abol- ished several taxes, such as the Electronic Transfer Levy, Covid-19 Levy and emis- sions and betting taxes, while reducing VAT.

To partly balance this loss of income, it has imposed higher taxes on unusually high mining company profits. To ensure long-term fiscal stability, it has intro- duced a debt cap of 45% of GDP, which is roughly the current debt-to-GDP ratio, and a requirement that all future Gha- naian governments achieve an annual primary surplus. The final policy is obvi- ously highly ambitious.

Ghana is restructuring its debt in re- turn for IMF support, with $8.7bn due for repayment by 2030, most of it in 2027 and 2028. In June 2025, the Ghanaian Parliament approved a $2.8bn debt re- structuring deal with 25 creditor nations, including the US, UK, Germany, China and France. The debt will now be repaid between 2039 and 2043, at reduced an- nual interest rates on a sliding scale of 1-3%, depending on the rate set out in the original loan agreement.

In January 2026, the government set- tled $1.47bn in energy sector debts that was owed to independent power produc- ers and gas suppliers, but which had af- fected the entire Ghanaian power and gas industry. It paid $393m in outstanding debts to IPPs, including $120m to Turkey’s Karpowership and $59.4m to Cenpower Generation.

It also transferred $480m to Italian firm Eni and commodity trader Vitol for gas piped from the Sankofa Gas Project. Finally, it repaid $597m to the World Bank to restore the partial risk guarantee for gas supplies from the Offshore Cape Three Points oil and gas field.

The government’s strategy has driven down inflation and interest rates, and helped strengthen the cedi (GH₵). Tighter monetary policy, growing foreign re- serves and fiscal consolidation saw the Ghanaian cedi appreciate by about 30% against the US dollar over the first half of 2025. Growing bank reserves, sharper fiscal discipline and measures to manage capital flows have contributed to greater exchange rate stability.

GDP grew by 5.6% in 2024 and an es- timated 5.3% last year, with the strongest growth in the agriculture and services sectors. Last June, S&P Global Market Intelligence concluded that the govern- ment’s reforms had already had a positive impact on Ghana’s private sector. “Input costs and output prices decreased, help- ing the growth of output, and new orders to hit seven-year highs. Moreover, firms hired staff at the strongest rate in over a decade of data collection,” it found.

Consumer inflation has fallen dramati- cally from the record high of 54.1% in De- cember 2022 to 5.4% exactly three years later, below the BoG’s target rate of 8%. The rate fell every month in 2025, most recently from 6.3% in November to 5.4% in December. “This steady decline signals a sustained shift toward price stability and improving macroeconomic condi- tions”, government statistician Alhassan Iddrisu told a press conference in January.

The BoG has repeatedly cut its main lending rate, from 28% last July to 15.5% at the end of January 2026, the lowest level for four years. “This was supported by the tight monetary policy stance, fiscal consolidation and significant build-up of reserves,” BoG Governor Johnson Pandit Asiama told journalists. Analysts expect further cuts over the course of this year. Although falling interest rates present challenges for bank margins, they also create opportunities for higher lending volumes and stronger economic activity.

Changes to microfinance

The BoG has particularly focused on overhauling the country’s microfinance regulatory framework. In the past, the fragmented regulatory structure allowed institutions with limited capital and weak controls to accept deposits, exposing customers to undue risk and under- mining confidence in the industry. The revised framework replaces the former convoluted structure with four clearly defined institutional catego- ries: microfinance banks, community banks, credit unions and last-mile providers.

At the same time, the BoG has in- structed all rural banks to convert into community banks by the end of March 2026, ending rural banks as a category. Those converting must have clearer governance structures and be required to meet new capital thresh- olds and ownership requirements de- signed to balance financial strength with community participation.

The Ministry of Finance argues that community banks will be better placed to finance agriculture, small businesses and local value chains to support inclusive growth and regional economic development.

Minimum capital requirements, strict ownership limits and more de- manding governance standards will be required by the end of 2026:

• Existing microfinance banks must raise GH₵50m and new entrants GH₵100m.

• Existing rural banks converting to community banks must meet GH₵5m in capital and urban community banks GH₵10m.

• Larger credit unions with assets in excess of GH₵60m will be licensed and supervised directly by the BoG. Smaller cooperatives become Last-Mile Providers.

• Last-mile providers include smaller cooperatives, susu operators, micro- credit enterprises, rotating savings and credit associations, village savings and loan associations and other informal or community-level financial groups.

These entities operate under delegated supervision rather than direct licens- ing by the central bank.

Delegated supervision allows bodies such as the Credit Union Association of Ghana to provide supervision to avoid the BoG having to oversee thousands of tiny last-mile providers. The reforms are likely to reduce the number of play- ers in the microfinance sector but those that remain will hopefully be stronger. The BoG said that it had introduced the changes to promote financial inclusion, which it emphasised “cannot be built on weak institutions”.

The combination of the measures tak- en by the government and those by the banks resulted in the proportion of non- performing loans falling from 24.6% in February 2024 to 19.5% in October 2025, although the rate is still too high.

Profitability has increased, with steady liquidity levels allowing the banks to sustain lending. While risks remain, confidence in the sector’s medium-term outlook has clearly strengthened.

The BoG aims to cap all b ank NPL ra- tios at 10% by the end of 2026 but achiev- ing it will require disciplined lending, improved credit information systems and continued macroeconomic stability. Given the pace of progress to date, this target seems very ambitious. Banks exceeding this threshold will be required to agree and implement recovery plans.

“While our banking sector remains broadly stable after the recent crises, it requires targeted reforms to address legacy challenges and ensure contin- ued resilience,” Johnson Pandit Asiama, Governor of the Bank of Ghana noted last year. “We shall tackle the problem of high non-performing loans and weak risk management practices in the industry.”

Focusing on the private sector

The Ghana Association of Banks is en- couraging member banks to focus lending on more productive parts of the economy in order to drive private-sector growth in

the face of rising public debt. It has called on member institutions to re- balance their portfolios towards more productive sectors, including agricul- ture, manufacturing, infrastructure and small and medium-sized enter- prises, to create jobs, boost exports and add value to the wider economy. It argues that relying on government securities and consumer spending risks limiting the country’s long-term growth potential.

The government is also trying to encourage banks to focus on sup- porting the private sector, even to the detriment of its own finance-raising plans. In December, the Ghanaian Parliament amended the Bank of Gha- na Act to block the central bank from buying government securities on the primary market and also strengthen lending caps.

Not all of the government meas- ures have been welcomed. In 2025, it banned Ghanaian pension funds from investing in offshore assets, to en- courage them to invest domestically. However, local funds have called on the government to lift the ban, with Afriyie Oware, the CEO of Axis Pen-sions commenting: “This is affecting our ability to diversify our portfolios and hedge our investments against macroeco- nomic shocks.” Ghanaian pension funds held GH₵86.23bn ($6.93bn) at end-2024, up 39% on the figure 12 months earlier.

There is no doubt that falling inflation, easing interest rates and the stabilising cedi are combining to restore confidence in the Ghanaian economy and creating a more supportive environment for busi- nesses and the financial services sector. In November, Finance Minister Forson said: “To our international partners and investors, Ghana is back, strong, credible and open for business. The story of Ghana is no longer one of crisis but of recovery and renewal.” n

The Bank of Ghana has embarked on wide-ranging reforms, particularly in the microfinance, rural and community banking segments, to strengthen the sector for the long term.

 Ghana’s central bank aims to cap the banks’ NPL ratios at 10% by the end of 2026, but this will require disciplined lending, better credit information systems, and macroeconomic stability.

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