Tax and utility pressures still affect businesses despite rising confidence – BoG governor

Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, says Ghana is moving into what could be a long stretch of price stability, even though businesses continue to struggle with taxes, utility costs, and high lending rates.

Speaking at the opening of the 127th Monetary Policy Committee (MPC) meeting in Accra on Monday, November 24, Dr Asiama noted that the growth of money supply has slowed sharply, helping to stabilise inflation.

He explained that real interest rates remain elevated, providing space for a gradual and cautious reduction in policy rates. Inflation, he added, is expected to fall between 4–6% by the end of the year and remain within the target range in 2026.

While Ghana’s progress is encouraging, the Governor warned that the global environment remains uncertain, with risks linked to commodity prices, geopolitical tensions, and tighter external financial markets.

He stressed that, on the domestic front, many firms continue to feel the pinch of persistent tax obligations, rising utility tariffs, and increasing credit costs—factors that still drag on business performance despite a broad improvement in sentiment.

For this quarter’s MPC discussions, Dr Asiama highlighted three priority areas:

The Path of Disinflation and Real Interest Rates: He explained that inflation is falling faster than earlier projected, causing real interest rates to rise. Although the data points to room for easing, he emphasised the importance of maintaining credibility and safeguarding the progress made in reducing inflation.

Foreign Exchange Market Reforms and Reserve Strategy: According to him, the revised FX operations framework has boosted transparency and improved market efficiency.

However, he noted the need for more public education and diversification of reserve assets to minimise concentration risks, especially those linked to gold holdings.

Financial Sector Stability and Credit Transmission: Dr Asiama reported that the banking system is generally stable, but a few institutions still face asset quality and recapitalisation challenges.

Strengthening the credit channel, he said, is crucial for sustaining Ghana’s ongoing growth rebound.

He pointed out that economic activity this quarter has been stronger than anticipated. The first six months of the year delivered 6.3% GDP growth, fuelled by strong performances in services and agriculture, while non-oil GDP expanded by 7.8%.

High-frequency indicators reinforce this trend, with the Composite Index of Economic Activity rising by about 9%, and confidence levels among consumers and businesses remaining upbeat.

These developments, he said, indicate that the economy’s negative output gap is closing and that Ghana is steadily transitioning from recovery to expansion.

Dr Asiama attributed this progress to continuous fiscal discipline, a prudent but firm monetary policy stance, and key structural reforms, such as improvements to the FX framework and efforts to rebuild external reserves.

He added that the 2026 Budget maintains this discipline and places job creation and economic expansion at the forefront.