The banking sector has been gradually recovering over the past year, but non-performing loans (NPLs) and sovereign exposures remain high, the International Monetary Fund (IMF) has revealed in its Technical Assistance Report on the Bank of Ghana following a mission to Ghana.

Following the 2022 Domestic Debt Exchange Programme (DDEP), the report pointed out that banks incurred significant losses on domestic government bonds holdings, which weakened their capital positions.

However, over the past year, capital adequacy has improved, reaching about 18.0 of risk weighted assets (RWA) as of August 2025—close to pre-DDEP levels.

“This recovery in capital and profitability has been partly supported by increased holdings of high-yielding BoG bills. Despite some improvements, the private sector NPL ratio remains elevated at 20.8 percent and banks continue to be highly exposed to domestic sovereign”, it added.

Credit to Private Sector to Pick Up

The report said while credit to the private sector has been constrained by high interest rates and credit risk, it is now expected to pick up from a low base.

It added that the authorities anticipate credit growth to strengthen on the back of declining interest rates and inflation, the associated shift away from sovereign holdings, the ongoing recovery from the DDEP, alongside BoG’s initiatives to reduce NPL levels.

“In this context, the authorities requested TA [Technical Assistance] on macroprudential policy to put in place the necessary framework to safeguard against potential future vulnerabilities”.

The TA mission undertook a comprehensive evaluation of the BoG’s macroprudential policy framework and toolkit.

The mission assessed the institutional framework for macroprudential oversight, reviewed the existing policy instruments, and provided detailed guidance on implementing the CCyB and the D-SIBs buffer. This was complemented by in-person seminars and workshops designed to build capacity and support effective operationalization of the above tools.

The report summarises the mission’s findings and recommendations.

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Bank sector recovering slowly, but bad loans and government debt still high - IMF

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