Falling interest rates could ease loan repayment challenges — Ghana Association of Banks
By Praisebell Rosemond Larbi
The Ghana Association of Banks (GAB) says falling interest rates could ease repayment pressures and curb high loan defaults, as lenders reorient their models in line with the Bank of Ghana’s push for more productive credit.
The industry body noted that the Ghana Reference Rate (GRR) has declined sharply to 19.67 percent in August 2025 from 29.72 percent in January, while the central bank has cut its policy rate from 28 to 25 percent.
The reduction, it said, should support credit growth and lower non-performing loans (NPLs), which remain elevated at 22 percent.
The remarks follow Bank of Ghana Governor Dr Johnson Asiama’s call for commercial banks to reduce reliance on government securities and expand financing to targeted, productive sectors as the economy undergoes a fragile recovery.
Chief Executive Officer of the GAB, John Awuah, told Accra-based Citi Business News that cheaper credit and stronger oversight would improve asset quality, but stressed the need for coordinated monitoring of risks in the credit market.
“Banks have always been ready. But with NPLs at 22 percent, we must be cautious. We are playing with depositors’ money and cannot throw it out when recovery expectations are low. We call on all stakeholders whose decisions affect banks’ ability to recover distressed accounts to act responsibly,” he said.
Mr Awuah explained that banks are willing to lend, but the environment must be supportive. He added that high lending rates often push borrowers into default because loans become unaffordable.
“If the rate comes down and lending rates follow, the propensity to perform on loans will be enhanced,” he noted.
The latest drop in the GRR marks a 10.05 percentage point fall since the start of the year. By contrast, the same period in 2024 saw rates remain well above 29 percent.
The Bank of Ghana has attributed the downward trend to improved macroeconomic stability, easing inflation and consistent monetary policy interventions.
The GAB said that sustaining this trajectory will be crucial to expanding access to credit, supporting private sector recovery and gradually reducing the industry’s high stock of non-performing loans.
