Credit-to-GDP Gap Remains Negative – BoG
The Bank of Ghana (BoG) says the country’s credit-to-GDP gap remained negative at the end of the first quarter of 2026, signalling that private sector credit growth continues to lag behind its long-term trend despite signs of a gradual recovery.
According to the Central Bank’s latest Monetary Policy Report, the negative credit-to-GDP gap indicates that lending to the private sector is expanding at a slower pace than the overall growth of the economy. The trend is typically associated with a period of credit contraction, where businesses and households have relatively limited access to new borrowing.
However, the Bank noted that the gap has continued to narrow steadily, reflecting an improvement in private sector credit growth. It explained that the persistence of the negative gap suggests there are currently limited systemic risks arising from excessive credit accumulation within the financial system.
The Bank believes this creates room for a measured expansion in lending to support economic growth without undermining financial stability.
According to the report, maintaining favourable macroeconomic conditions alongside the continued resilience of the banking sector will be critical to sustaining the recovery in credit growth. The Central Bank stressed that a stable financial system will be essential in ensuring that increased lending translates into stronger economic activity while safeguarding the health of the banking industry.
The report also highlighted an improvement in macro-financial conditions as of the end of March 2026. The BoG said risks to the banking sector from both global and domestic economic developments moderated on a year-on-year basis, reinforcing the sector’s resilience and growth.
Globally, easing lending conditions and lower inflation helped improve financial conditions and contributed to greater stability in the external environment. Domestically, the Central Bank attributed the improved outlook to exchange rate stability, subdued inflationary pressures, a strong build-up in foreign reserves, and declining public debt levels.
These developments, the Bank said, have reduced systemic vulnerabilities while improving the debt servicing capacity of both households and businesses, reflecting the broader gains in macroeconomic stability.
Despite the positive outlook, the Bank of Ghana cautioned that near-term macro-financial risks remain, particularly from ongoing geopolitical tensions in the Middle East. It warned that any escalation in the conflict could increase import costs and place renewed pressure on the domestic economy.
The Central Bank therefore called for strong coordination between monetary and fiscal authorities to cushion the economy against potential external shocks and preserve the gains made in restoring macroeconomic stability while supporting sustainable credit growth.
