The Ghana Association of Banks (GAB) has reported a 0.19% (0.02 percentage point) increase in the Ghana Reference Rate (GRR), from 10.59% recorded in July to 10.61% for August 2026, suggesting that lending conditions across the banking sector remain stable.

For several months, the Ghana Reference Rate (GRR) had been on a downward trend until it rose slightly in July, bringing the decline to an end. It increased marginally again in August, suggesting that borrowing costs are unlikely to change significantly in the short term.

“The Ghana Reference Rate (GRR), the benchmark used by commercial banks to price loans, is set to rise marginally to 10.61% in August 2026, up from 10.59% in July,” the report read.

About Ghana Reference Rate (GRR)

The Ghana Reference Rate (GRR) is Ghana’s standardised benchmark interest rate used by commercial banks to price loans. It was introduced in April 2018 by the Bank of Ghana (BoG) in collaboration with the Ghana Association of Banks (GAB) to replace the inconsistent “base rates” that banks previously set individually.

Implications of GRR increase for businesses

The marginal increase in the Reference Rate means businesses should not expect loans to become any cheaper this month, as banks are unlikely to reduce the interest rates they charge on new loans.

Companies seeking loans to expand their operations, acquire equipment, or finance working capital are likely to continue operating in an environment where borrowing costs remain relatively high compared with earlier in the year, when the Reference Rate was on a downward trend.

However, the limited increase indicates that financing conditions remain broadly favourable, supported by easing inflation and improving macroeconomic stability.

Implications for banks

Commercial banks are expected to maintain a cautious approach to lending as they balance credit growth with risk management.

The slightly higher Reference Rate could provide some support for banks’ interest margins, while lenders continue to assess borrowers based on credit quality, industry risks, and repayment capacity.

With economic activity showing signs of recovery, banks are also expected to compete for stronger corporate and retail customers as demand for credit gradually improves.

The new Ghana Reference Rate takes effect on August 5, 2026, and will serve as the benchmark for loan pricing by commercial banks throughout the month.

Ghana Reference Rate since January 2026

In January 2026, the Ghana Reference Rate stood at 15.68%, announced on January 7. This relatively high level reflected the prevailing monetary conditions at the start of the year.

By February 4, 2026, the GRR had declined to 14.58%, marking the beginning of a downward trend. The reduction continued into March 4, 2026, when the benchmark dropped more sharply to 11.71%, signalling easing conditions in the banking sector.

The decline persisted in April 2026, with the rate falling to 10.06% on April 1. This was followed by a slight adjustment in May 2026, when the GRR was announced at 10.03% on May 6.

In June 2026, the rate dipped marginally again to 10.02%, effective June 3. This represented the lowest point in the sequence, showing that lending conditions had stabilised around the 10% mark after months of consistent decline.

BoG records GH¢1.64bn as loan losses in 2025

Banks in Ghana continue to face challenges with customers failing to repay loans on time, or defaulting altogether, with a recent report from the Bank of Ghana (BoG) indicating that the problem persists.

This was revealed after the central bank published its Domestic Money Banks (DMBs) Income Statement, an annual financial report that shows how Ghana’s commercial banks performed over the year.

According to the statement, banks in Ghana wrote off GH¢1.64 billion in 2025, representing a 57.1% decline compared with the amount recorded in 2024.

Given the banking sector’s history of non-performing loans (NPLs), banks made provisions totalling GH¢3.82 billion for bad debts in 2024. The provision covered loan losses, depreciation, and other expenses.

According to the January 2026 Banking Developments Report, asset quality risks in the banking sector 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 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, representing a 1.3 percentage-point increase.

Meanwhile, the share of NPLs attributed to the public sector declined to 2.5% from 3.8% a year earlier.

Amid the private sector’s challenges in repaying loans, the Bank of Ghana indicated that there has been an improvement in the proportion of bad loans in the banking industry compared with the previous 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.