Professional services firm Deloitte has raised fresh concerns about the stability of Ghana’s banking sector, warning that the country’s high Non-Performing Loans (NPL) ratio continues to pose a significant threat despite improvements in asset quality.
In its latest commentary on the recent monetary policy decision by the Bank of Ghana, Deloitte noted that while the financial sector has shown resilience, the elevated NPL ratio of 18.7 percent remains a major risk factor that could undermine progress.
“Although asset quality has improved, the NPL ratio of 18.7% remains a key risk to the banking sector. Possible resurgence in inflationary pressures due to the pass-through effect of higher crude oil prices and ongoing geopolitical tensions.”
Deloitte
The warning underscores the delicate balance policymakers must maintain between sustaining economic recovery and safeguarding financial sector stability.
Policy Rate Cut Reflects Economic Recovery
The concerns come on the back of the Bank of Ghana’s decision to reduce its monetary policy rate by 150 basis points to 14.0 percent during its 129th Monetary Policy Committee meeting in March 2026.
The decision reflects growing confidence in the country’s macroeconomic outlook. Ghana has recorded strong economic growth, easing inflation, and improved external sector performance, all of which contributed to the central bank’s move to ease monetary conditions.
According to the Monetary Policy Committee, real GDP growth reached 6 percent in 2025, signaling robust domestic economic activity. Inflation has also declined significantly, falling to 3.3 percent in February 2026, while monetary aggregates have slowed, supported by a 0.5 percent contraction in reserve money during the same period.
These indicators point to a stabilizing economy that is gradually recovering from previous macroeconomic challenges.
External Sector Strengthens Amid Global Uncertainty
Ghana’s external position has also shown notable improvement. External reserves rose to 14.5 billion dollars in February 2026, providing a strong buffer against potential external shocks.
Deloitte acknowledged that the country’s strengthened fiscal and external position offers the government increased capacity to absorb future economic shocks. This resilience is particularly important given the uncertain global environment characterized by geopolitical tensions and volatile commodity prices.
However, the firm warned that global developments, especially in the Middle East, could still disrupt Ghana’s economic trajectory by triggering higher crude oil prices and renewed inflationary pressures.
The Monetary Policy Committee, chaired by Governor Johnson Asiama, emphasized its commitment to closely monitor these external risks and their potential impact on price stability.
Inflation Risks and Interest Rate Dynamics
While inflation has declined sharply in recent months, Deloitte cautioned that this trend may not be sustained if global conditions worsen. Rising crude oil prices could lead to higher transportation and production costs, which may eventually be passed on to consumers.
The firm also highlighted the positive real returns on investment resulting from the wide gap between inflation and interest rates. This development has supported investor confidence and contributed to financial market stability.
However, the reduction in interest rates could introduce new risks. Lower yields may discourage foreign investors, potentially leading to capital outflows that could weaken the local currency.
Currency Stability and Liquidity Concerns
Another key concern raised by Deloitte is the potential for renewed currency volatility. As interest rates decline and liquidity in the banking sector increases, there is a risk that excess liquidity could exert pressure on the Ghana cedi.
A surge in liquidity often leads to increased demand for foreign currency, which can weaken the domestic currency if not properly managed. This scenario could reverse recent gains in exchange rate stability and complicate the fight against inflation.
The central bank is therefore expected to remain vigilant in managing liquidity conditions to prevent excessive volatility in the foreign exchange market.
Balancing Growth and Financial Stability
Ghana’s economic outlook remains cautiously optimistic, with strong growth, declining inflation, and improved external reserves providing a solid foundation for recovery. However, the high NPL ratio serves as a reminder that underlying vulnerabilities persist within the banking sector.
Addressing the issue of non-performing loans will be critical to ensuring long-term financial stability. High NPL levels can constrain banks’ ability to lend, reduce profitability, and weaken confidence in the financial system.
Deloitte’s assessment highlights the need for continued reforms and prudent risk management within the banking sector. Strengthening credit risk assessment, improving loan recovery processes, and enhancing regulatory oversight will be essential in reducing NPL levels over time.
At the same time, policymakers must carefully manage the trade-offs associated with monetary easing to avoid triggering unintended consequences such as capital flight and currency instability.
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