The Bank of Ghana undertook one of its most significant monetary policy interventions in recent years in 2025, spending about GH₵17 billion to absorb excess liquidity from the financial system.
According to reports reviewed by the Accra Street Journal (ASJ), the liquidity absorption operations were part of a broader effort by the central bank to stabilise inflation, strengthen monetary policy transmission and support the recovery of Ghana’s economy.
The disclosure was made by Johnson Pandit Asiama, Governor of the Bank of Ghana, while addressing Parliament’s Committee on Economy and Development.
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Rising Cost of Monetary Policy Operations
The cost of liquidity management increased significantly during the period of tight monetary policy.
Governor Asiama explained that the central bank intensified open market operations to withdraw excess reserves from the banking system.
As a result, the cost of liquidity absorption operations nearly doubled, rising from GH₵8.6 billion in 2024 to approximately GH₵17 billion by the end of 2025.
The increase was largely driven by elevated policy interest rates, which made liquidity management operations more expensive.
Despite the rising cost, the central bank emphasized that the measures were necessary to ensure that monetary policy actions had the intended impact on inflation and financial stability.
Restoring Macroeconomic Stability
The liquidity absorption programme formed part of a broader stabilisation strategy by the Bank of Ghana following a period of high inflation and financial sector pressures.
The policy approach aimed to:
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Reduce excess money circulating in the banking system
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Strengthen the transmission of interest rate policies
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Stabilise the Ghanaian currency
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Restore confidence in the financial sector
According to the Accra Street Journal, these measures were critical in helping authorities manage inflationary pressures and rebuild investor confidence during Ghana’s recent economic recovery phase.
Ghana’s Banking Sector Shows Strong Recovery
Alongside these monetary policy measures, the central bank says Ghana’s banking sector has improved significantly.
Governor Asiama told lawmakers that the banking system is now liquid, solvent and profitable, indicating stronger financial health across the industry.
The improvements come after the sector faced significant challenges following the Domestic Debt Exchange Programme, which placed pressure on bank capital buffers and raised concerns about asset quality.
Stronger Capital and Lower Bad Loans
Recent banking sector indicators suggest that the recovery is gaining momentum.
The capital adequacy ratio has improved to 17.5%, comfortably above the regulatory minimum of 13%.
At the same time, the non-performing loan (NPL) ratio declined from 21.8% to 18.9%, with authorities targeting a further reduction to around 10% by the end of 2026.
These improvements reflect recapitalisation efforts and closer regulatory supervision by the central bank.
Growth in Assets, Deposits and Credit
Balance sheets across Ghana’s banking sector have also expanded significantly.
Key financial indicators include:
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Total banking assets increased from GH₵368 billion to GH₵447 billion
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Deposits rose nearly 18%, from GH₵276 billion to GH₵325 billion
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Gross loans increased from GH₵95 billion to GH₵111 billion
Liquidity conditions remain strong, with liquid assets covering roughly 96% of deposits, suggesting that banks are well positioned to meet withdrawal demands and support lending.
Credit activity has also improved. Cumulative new loan disbursements increased from GH₵80.95 billion in October 2025 to GH₵104.17 billion by December.
Private Sector Credit Rebounds
One of the most notable improvements has been the recovery in private sector credit.
Nominal credit growth exceeded 19%, while real credit growth reached 13%, compared with only 2% the previous year.
This rebound suggests that banks are gradually resuming their role in financing business expansion and economic activity.
Why a Strong Banking Sector Matters
For the Accra Street Journal, the strengthening of Ghana’s banking system is a crucial step in supporting long-term economic recovery.
A healthier financial sector enables:
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Businesses to access loans for expansion and investment
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Entrepreneurs to finance new ventures
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Households to obtain mortgages, education loans and small business credit
Lower non-performing loans and stronger capital buffers also reduce the risk of financial instability, protecting depositors and strengthening public confidence in the banking system.
Supporting Ghana’s Economic Recovery
Governor Asiama emphasized that the improvements in the financial sector are a direct result of deliberate policy actions by the Bank of Ghana.
By tightening liquidity conditions, strengthening supervision and encouraging recapitalisation, the central bank has sought to ensure that macroeconomic stabilisation translates into tangible benefits for the wider economy.
For analysts following Ghana’s financial markets, the recovery of the banking sector will play a key role in sustaining economic growth, creating jobs and restoring investor confidence in the years ahead.
Source: Accra Street Journal
Last Updated on March 14, 2026 by Samuel Kwame Boadu
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Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.
