Dr. Ernest Addison, Bank of Ghana Governor
The confidence that businesses and consumers have in the economy picked up in the latter part of 2024, following the improved macroeconomic conditions in the country, according to the Bank of Ghana (BoG).
“The latest confidence surveys conducted in December 2024 showed an improvement in both consumer and business confidence. Consumer confidence improved largely due to optimism about future economic conditions,” stated Dr. Ernest Addison, Governor of the BoG.
Speaking at the 122nd Monetary Policy Committee (MPC) press conference in Accra on Monday, where he announced a new policy rate, Dr. Addison, who chairs the MPC, said business confidence also increased as firms met their short-term targets and expressed positive sentiments about company and industry prospects in line with the improving macroeconomic conditions.
At Monday’s meeting, the MPC maintained the policy rate for the third consecutive time at 27 percent, citing improved macroeconomic conditions and positive economic growth.
“Ghana’s Purchasing Managers’ Index (PMI), however, declined to 49.4 percent in December 2024 from 52.5 percent in the previous month, largely due to a slowdown in firms’ operations during the election period,” he emphasized.
The Governor also stated that private sector credit growth continued to increase towards pre-2022 macroeconomic crisis levels, albeit at a slow pace.
“The nominal growth in private sector credit increased to 26.3 percent in December 2024, up from 10.7 percent recorded in the corresponding period of 2023. In real terms, credit to the private sector increased by 2.0 percent, compared to a 10.2 percent contraction during the same period the previous year,” the Chairman of the MPC explained.
Regarding the banking sector, the Governor noted that it continued to be profitable, well-capitalized, and liquid.
“The assets of the banking sector grew by 33.8 percent in 2024. The Capital Adequacy Ratio (CAR) with reliefs grew marginally to 14.0 percent in December 2024 from 13.9 percent in December 2023. However, the CAR without reliefs rose to 11.3 percent in December 2024, higher than the 8.3 percent recorded in December 2023. Profits increased in 2024 compared to 2023, but the pace of growth slowed, leading to a moderation of profitability indicators during the period,” the Chairman of the MPC explained.
Additionally, Dr. Addison stated that elevated credit risk remained the primary upside risk to the banking sector.
“The industry’s Non-Performing Loans (NPL) ratio increased to 21.8 percent in December 2024, up from 20.6 percent in December 2023.”
Dr. Addison also indicated that he hoped the high NPL ratio would decrease as the economy improved.
He attributed the high NPL ratio to the macroeconomic difficulties the economy experienced in previous years.