The Ghana Association of Banks (GAB) has reported a 0.30% decline in the Ghana Reference Rate (GRR). The rate, which was 10.06% in April, has dipped marginally to 10.03% in May.

This marks a slow but steady easing in the country’s borrowing conditions, reflecting a continued downward trajectory in benchmark lending indicators following sharper declines earlier in the year.

GAB reported the May 2026 GRR decline through an official press release issued on Wednesday, May 6, 2026, signed by its Chief Executive Officer, John Awuah, where it stated that the new rate was scheduled to take effect from May 6.

However, the immediate impact on commercial lending rates is likely to remain limited.

The GRR serves as the base benchmark for pricing loans in Ghana’s banking sector and is calculated using a weighted formula that includes Treasury bill rates, the average interbank rate, and the Monetary Policy Rate set by the Bank of Ghana.

The GRR serves as the base benchmark for pricing loans in Ghana’s banking sector and is calculated using a weighted formula that includes Treasury bill rates, the average interbank rate, and the Monetary Policy Rate set by the Bank of Ghana.

GRR rate downward trend since January to May

Between January and May 2026, the Ghana Reference Rate (GRR) recorded a sustained downward trend. The rate fell from 15.58% in January to 14.58% in February, representing a 6.42% decline. It then dropped sharply to 11.71% in March, a 19.68% decline compared to February. In April, the GRR eased further to 10.06%, marking a 14.09% decline from March.

By May, the rate dipped marginally again to 10.03%, a 0.30% decline from April. Overall, this reflects a cumulative fall of 5.55 percentage points (–35.6%) over the five months, signalling a steady easing of borrowing conditions in Ghana’s financial sector.

Analysts project that the gradual decline would make room for banks to adjust lending rates, potentially improve access to credit, particularly for small and medium-sized enterprises and support a recovery in private sector investment.

However, the pace of transmission to actual loan pricing will depend on several factors, including borrower risk profiles, banks’ cost of funds and internal credit risk frameworks.

As a result, any reduction in lending rates is likely to be phased, reflecting loan repricing cycles and prevailing market conditions.

BoG records GHC 1.64bn as loan losses in 2025

Banks in Ghana are still grappling with customers not repaying loans on time, or in some cases defaulting altogether, with a recent report from the Bank of Ghana (BoG) affirming that the challenge persists.

This was deduced after the central bank published its Domestic Money Banks (DMBs) Income Statement, i.e., the annual financial report that the BoG publishes to show how Ghana’s commercial banks performed over the year.

According to the statement, Banks in Ghana wrote off GH¢1.64 billion in 2025, marking a reduction of 57.1% in 2024.

Given the history of the banking sector’s Non-Performing Loans (NPL), the banks made a provision of GH¢3.82 billion as bad debt in 2024. The total provision was made for loan losses, depreciation & others.

According to the January 2026 Banking Developments Report, the asset quality risks of banks remained elevated in December 2025, although the industry’s Non-Performing Loans (NPL) ratio declined to 18.9% in December 2025, from 21.8% in December 2024.

Similarly, the NPL ratio adjusted for the fully provisioned loan loss category declined from 8.5% to 5.0% during the same comparative period.

The NPL stock, however, increased by 0.8% to GH¢21.0 billion in December 2025 compared with a growth of 31.4% recorded in December 2024.

A decomposition of the NPLs showed that the private sector emerged as the leading contributor, due to its dominant share of total credit. The statement also noted that the proportion of NPLs attributable to the private sector increased to 97.5% in December 2025, from 96.2% in December 2024, marking a 1.35

% while that of the public sector declined to 2.5%, from 3.8% a year earlier.

Amid the private sector’s poor performance in paying back its loans, the Bank of Ghana (BoG), in its statement, indicated that there has been an improvement in the percentage of bad loans in the banking industry year-on-year.

Accordingly, the NPL ratios in the construction and agriculture, forestry and fishing sectors increased from 29.8% and 38.0% to 30.7% and 46.3%, respectively. All other sectors recorded improvements in asset quality during the review period.