Credit extended to Ghana’s public sector recorded a sharp contraction in 2025, reflecting a slowdown in government borrowing and fiscal activities during the year.
According to the latest report released by the Bank of Ghana, credit to the public sector declined by 25.5 percent to GH¢4.8 billion at the end of December 2025.
The decline points to a notable shift in the credit environment, as the government reduced its reliance on financing from the domestic banking sector. While lending to the private sector continued to grow during the same period, the pace of expansion slowed compared to the previous year, suggesting that overall credit growth in the economy remained moderate.
Financial analysts say the changes in credit patterns reflect ongoing economic adjustments as Ghana works toward strengthening fiscal discipline and maintaining macroeconomic stability.
Reduced Government Borrowing
The 25.5 percent decline in public sector credit indicates that government borrowing from the banking system slowed considerably in 2025. At GH¢4.8 billion, the level of credit extended to the public sector was significantly lower than what had been recorded in previous periods.
Public sector credit often reflects the scale of government spending and financing needs within the economy. When the government reduces borrowing from domestic banks, it may signal a deliberate effort to control public debt, improve fiscal balances, or rely on alternative financing sources.
Economic observers suggest that the contraction could also be linked to broader fiscal reforms aimed at restoring confidence in Ghana’s public finances. Reduced government borrowing may help ease pressure on domestic credit markets and allow financial institutions to channel more funds toward private sector activities.
Slower Growth In Private Sector Credit
While government borrowing declined, lending to the private sector continued to expand, although at a slower rate. Private sector credit, which includes loans to businesses and households, increased by 19.2 percent to GH¢106.2 billion in December 2025.
Despite the increase in nominal terms, the growth rate was lower than the 26.3 percent recorded in 2024. The moderation suggests that banks adopted a more cautious lending approach during the year.
In real terms, private sector credit actually declined compared to the previous year. This means that inflation and other macroeconomic pressures reduced the real value of loans available to businesses and consumers.
Private sector credit plays a critical role in economic development because it supports business expansion, job creation, and household spending. Slower growth in lending may therefore reflect broader economic adjustments taking place across the country.
Total Loans Continue To Increase
Despite the decline in government borrowing and the moderation in private sector credit growth, the overall stock of loans and advances within the banking industry continued to expand.
The Bank of Ghana reported that the stock of gross loans and advances rose by 16.2 percent to GH¢111.0 billion in December 2025. This represents slower growth compared to the 24.1 percent expansion recorded in December 2024.
The increase in the total loan stock suggests that banks remained active in supporting different sectors of the economy, although lending growth slowed compared to earlier periods.
Industry experts say the moderation in loan growth could reflect tighter credit conditions, careful risk management by banks, and broader efforts to strengthen financial sector stability.
Services Sector Leads Credit Allocation
Data from the Monetary Policy Report shows that the services sector remained the largest recipient of credit from the banking industry.
At the end of December 2025, the services sector accounted for 37.1 percent of total credit extended by banks. This represents a notable increase from the 31.7 percent share recorded in December 2024.
The services sector includes a wide range of industries such as telecommunications, hospitality, transport, and professional services. These industries have become increasingly important to Ghana’s economic growth, which helps explain the rising share of credit directed toward them.
Strong demand for financing within the services sector also reflects the sector’s growing role in employment creation and business development.
Commerce And Finance Sector Maintains Strong Position
The commerce and finance sector remained another major recipient of credit from the banking industry. In December 2025, the sector accounted for 24.3 percent of total credit.
Although this share declined from the 27.0 percent recorded in December 2024, the sector continues to play a vital role in Ghana’s credit landscape.
Commerce and finance activities include wholesale and retail trade, financial services, and other commercial operations that require access to bank financing for working capital and investment.
The sector’s strong credit presence reflects the importance of trade and financial services in driving economic activity across the country.
Manufacturing Sees Marginal Improvement
Credit to the manufacturing sector recorded a slight improvement during the year under review. The sector’s share of total credit increased marginally to 10.7 percent in December 2025, up from 10.5 percent in December 2024.
Although the increase appears modest, it signals gradual improvement in financing for industrial activities. Manufacturing remains a key component of Ghana’s long term industrialization strategy and plays an important role in value addition, export growth, and job creation.
Together, the services, commerce and finance, and manufacturing sectors accounted for 72.1 percent of total credit extended by the banking industry in December 2025. This represents an increase from the 69.3 percent share recorded in the previous year.
The data highlights the continued concentration of credit within a few dominant sectors of the economy.
Utilities Sector Receives Lowest Credit Share
The electricity, water and gas sector received the smallest share of total credit from banks. According to the Bank of Ghana report, the sector accounted for just 3.0 percent of total credit in December 2025.
This was lower than the 4.1 percent share recorded in December 2024. The relatively low level of credit to the utilities sector may reflect the capital intensive nature of projects in the industry as well as financing challenges associated with large scale infrastructure investments.
However, experts say sustained investment in electricity, water, and gas infrastructure remains essential for supporting industrial growth and ensuring reliable services for businesses and households.
Outlook For Ghana’s Credit Environment
The latest credit data reflects a changing financial environment as Ghana’s economy undergoes adjustment and stabilization. The contraction in public sector borrowing suggests reduced pressure on domestic credit markets, while the continued growth in private sector lending indicates ongoing support for business activities.
In the intervening time, economists believe that stronger macroeconomic stability, improved investor confidence, and declining inflation could help stimulate credit growth and support broader economic expansion in the coming years.
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