Ghana must urgently complete reforms to its financial sector resolution framework to strengthen the ability of regulators to deal with distressed institutions and safeguard financial stability, the International Monetary Fund (IMF) has said.
The Fund said the banking sector had strengthened following recapitalisation and supervisory interventions, but stressed that persistent vulnerabilities, particularly among some state-owned and private banks and specialised deposit-taking institutions, required decisive action.
The IMF made the observation in its 2026 Article IV Consultation and Sixth Review under Ghana’s Extended Credit Facility programme.
“While financial sector resilience has improved, vulnerabilities persist, particularly in some state-owned and private banks and specialized deposit-taking institutions,” the IMF said.
It added that “safeguarding financial stability warrants decisive corrective measures, robust supervision, and finalization of the crisis management and resolution framework.”
A major component of the reform agenda is the amendment of Ghana’s banking crisis management and resolution legislation to address gaps that could undermine the effective resolution of distressed financial institutions.
The authorities have committed to submitting the necessary legislative amendments to Parliament.
According to the report, the reforms are intended to bring Ghana’s crisis management and resolution framework into closer alignment with international standards and sound practices.
Once the amendments are passed, the authorities have committed to issuing implementing regulations and fully operationalising the upgraded bank resolution framework within six months.
The reform is considered particularly important because Ghana continues to deal with the legacy of the financial sector clean-up and vulnerabilities arising from high levels of non-performing loans.
The IMF reported that the banking sector’s system-wide capital adequacy ratio had improved to 17.51 percent by the end of 2025, excluding regulatory reliefs.
However, non-performing loans remained high at 18.1 percent, indicating that credit risks continue to weigh on financial sector stability.
The Fund also said many specialised deposit-taking institutions continued to face capital shortfalls.
At the same time, private sector credit as a share of GDP continued to decline, despite an improvement in real credit following reductions in the monetary policy rate.
The IMF attributed the weak expansion in private sector credit partly to tight financial conditions and banks’ continued preference for holding sovereign exposures.
The authorities have therefore adopted a multi-pronged strategy to tackle rising credit risks and support sustainable credit growth.
The Bank of Ghana is implementing a regulatory notice issued in August 2025 requiring financial institutions to reduce their non-performing loan ratios.
Under the framework, banks, specialised deposit-taking institutions and non-bank financial institutions were required to maintain an NPL ratio below 15 percent by the end of June 2026 and 10 percent by the end of 2026.
Institutions exceeding the limits are required to submit NPL reduction plans, maintain adequate provisioning and implement measures targeting willful defaulters.
The BoG is also working with relevant stakeholders on a time-bound roadmap to strengthen the credit impairment and recovery framework.
The objective is to improve loan recovery and create conditions for increased sustainable lending to productive sectors of the economy.
The authorities are simultaneously pursuing reforms to strengthen the broader financial sector architecture.
These include completing the rollout of Basel II and Basel III capital, liquidity and supervisory review reforms, as well as strengthening Ghana’s deposit insurance scheme in line with international standards.
The government also plans to expand access to credit for micro, small and medium-sized enterprises through qualifying institutions and targeted facilities, including facilities aimed at women-owned businesses.
The reforms follow significant measures taken to address weaknesses in state-owned banks.
The authorities reported that the recapitalisation and governance and internal control reforms of two private-public banks had been completed in July 2026 as a prior action under the IMF programme.
They also completed a special review of the risk management systems, controls and culture of state-owned banks with high non-performing loan ratios.
The review is expected to guide further supervisory action and the phased lifting of restrictions imposed on affected institutions.
The IMF nevertheless cautioned that improved capital positions alone would not be sufficient to guarantee financial stability.
It stressed the importance of effective resolution mechanisms that can deal with non-viable institutions without creating excessive risks for the Bank of Ghana or the public finances.
The authorities said they were committed to strengthening the crisis management and resolution framework “to ensure improved alignment with international standards and sound practices to support financial system stability, including effective resolution of nonviable institutions under Ghana’s strategy to tackle financial sector legacy issues.”
The IMF has also highlighted the need to protect the central bank’s balance sheet as part of the broader financial sector reform agenda.
It said preserving monetary policy credibility would depend partly on safeguarding the independence and financial position of the Bank of Ghana, including through the elimination of quasi-fiscal activities and implementation of the central bank’s recapitalisation plan.
