The Bank of Ghana is optimistic of recovery of Ghana’s economy from the recent economic crisis.

According to the First Deputy Governor, Dr. Maxwell Opoku-Afari, the recovery is gaining momentum, with the current inflation rate sitting at a 14-month low.

Speaking to the 'The Banker', he said the domestic debt restructuring is mostly complete, as commercial banks are expected to increase their provision of credit to the private sector.

Ghana concluded the first phase of its Domestic Debt Exchange Programme in February 2023, with 85% of eligible bondholders participating. The debt exchange was reopened in September 2023 for another ¢12.9 billion ($1.1 billion) of local bonds.

In May 2023, the International Monetary Fund also announced a $3 billion Extended Credit Facility arrangement for Ghana to help the country revive its economy. The programme also focused on encouraging private investment and growth.

“At the moment, we are not seeing capital going into the private sector because we had a debt restructuring,” said Dr. Opoku-Afari.

“The [commercial] banks took a hit but we have seen signs of recovery of the banks’ balance sheets in the first half of the year. We are done with the Domestic Debt Restructuring and are expecting the external debt restructuring to be done soon”, he stated.

He continued “When you’re going through this debt restructuring, you expect the commercial banks to audit their books, look at their balance sheet, and say [to themselves] that now that they are beginning to see stability, [and] they can start to increase credit levels in the private sector.

“Dr. Opoku-Afari added “We, as a central bank, are very optimistic that once we are able to solidify and consolidate these [economic recovery] gains, the banks will begin to increase their credit into the private sector.”

Furthermore, the First Deputy Governor said Ghana has really done a lot now to be able to contain this crisis and turn things around.

“We’re beginning to see economic stability is taking shape. Inflation is coming down significantly, dropping from 54% at the beginning of this year to 35% in November [2023]. So in just 10 months, we’ve turned things around. What we need to do now is to consolidate against the gains we’ve made and make sure that [they are] well anchored to better prepare for the future”.

Domestic economic activity continues to recover

In the recent Monetary Policy Report, the Bank of Ghana said the domestic economic activity continues to recover evidenced by the steady improvement in the Central Bank’s high-frequency economic indicators.

The CIEA is recovering from negative territory and is likely to turn positive by year-end, showing a more solid rebound in economic activities.