Following the BoG’s first post-Monetary Policy Committee’s (MPC) decision to increase the policy rate by 100 basis points to 28 percent, Governor Dr. Johnson P. Asiama is urging banks to sustain credit flow to viable enterprises – especially those in vulnerable sectors – despite a tightening monetary environment.
This appeal formed the central message of Dr. Asiama’s address to commercial banks’ chief executives during BoG’s first post-Monetary Policy Committee (MPC) meeting under his leadership.
While acknowledging that the policy rate hike could heighten borrowing costs and constrain business activity, Dr. Asiama stressed the importance of striking a balance between prudence and support.
In other words, Dr. Asiama wants banks to avoid an automatic pass-through of rate hikes and maintain credit support to sectors essential for economic recovery.
The Governor’s remarks were delivered against a backdrop of ongoing reforms in the financial sector, which continues to recover from two major disruptions – the banking sector clean-up and Domestic Debt Exchange Programme (DDEP).
Dr. Asiama’s outlook that the financial system is robust comes amid signs of recovery highlighted by the most recent data from BoG.
As of End-February 2025, total banking assets had grown by 34.05 percent year-on-year while deposits increased by 27.89 percent. Additionally, the Capital Adequacy Ratio (CAR) stood at 14.35 percent – well above the 10 percent regulatory minimum.
However, risks linger – especially as solvency challenges persist in some domestically controlled and state-owned banks, where recapitalisation efforts remain incomplete. BoG is engaging these institutions to address capital shortfalls, ensure compliance with prudential standards and restore depositor trust.
Additionally, non-performing loans (NPLs) remain elevated with the gross NPL ratio at 22.57 percent – largely due to legacy exposures. Even after adjusting for fully provisioned loans the NPL ratio remains at 8.93 percent, prompting a call for stronger credit risk management and underwriting standards.
To keep pace with emerging challenges, BoG is enhancing its supervisory capabilities. A new Resolvability Assessment Framework is in development to improve crisis preparedness.
The Governor emphasised a shift from reactive enforcement to forward-looking supervision, with priorities including risk-based analytics, sustainability assessments and enhanced governance.
Asiama urged banks to deepen their support for trade finance and regional integration – particularly through platforms like the Pan-African Payment and Settlement System (PAPSS).
