Credit extended by banks to private, public sector declines by 59% in June
Total credit advanced by banks to the private sector and public institutions recorded a sharp decline in June 2025, falling to GHS4.68 billion from GHS11.35 billion in the same period of 2024, according to the July 2025 Monetary Policy Report of the Bank of Ghana (BoG).
The contraction represents a year-on-year dip of about 142 per cent, reflecting a notable tightening of credit conditions.
The report attributed the decline largely to reduced lending to the public sector. Credit flows to the private sector also slowed, reaching GHS6.69 billion in June 2025 compared with GHS11.69 billion a year earlier.
Despite the slowdown in flows, private sector credit accounted for a larger share of total outstanding credit, rising to 95.05 per cent in June 2025, relative to 92.40 per cent in June 2024.
This indicates that while the volume of new credit dropped, banks continued to channel a greater portion of their credit portfolio towards private businesses.
Sectoral distribution of credit showed that services remained the most dominant recipient, taking up 76.53 per cent of total flows.
This was followed by commerce and finance at 17.65 per cent, electricity, gas and water at 6.52 per cent, manufacturing at 4.55 per cent, and agriculture, forestry and fisheries at 4.12 per cent.
The outstanding stock of private sector credit at end-June 2025 was estimated at GHS84.75 billion, compared with GHS78.06 billion in June 2024, pointing to nominal growth over the period.
However, in real terms, private sector credit contracted by 4.48 per cent, slightly deeper than the 4.18 per cent contraction recorded a year earlier.
According to the BoG, the decline in real private sector credit reflects the combined effects of tight liquidity conditions in the banking sector and high demand for government securities.
The central bank warned that sustained contractions in real credit to the private sector could weigh on investment and output growth if the trend persists.
