Ghana’s banks reported a Non-Performing Loan (NPL) ratio of 16.1% as of June 2026, according to S&P Global. The US-based ratings agency described this figure as “too high,” tying it to the fallout from the country’s domestic debt exchange programme in 2022, government arrears owed to suppliers and contractors, and ongoing exchange rate and inflation pressures on households and businesses.
S&P Global’s assessment of Ghana’s banking sector came as part of its sovereign rating review. It said credit risk remains elevated after years of macroeconomic instability, a government default, and the restructuring of debt. The 2022 domestic debt restructuring forced 13 local banks to recapitalise. Yet S&P pointed out that five banks, including one state-owned institution, remain undercapitalised despite meeting most recapitalisation requirements.
“Although most have met the recapitalization requirements, five of them (including a state-owned bank) are still undercapitalised,” the report stated. This runs contrary to the Bank of Ghana’s position that all banks have satisfied the new minimum capital requirement.
The NPL ratio reflects a banking sector still grappling with the consequences of economic shocks over recent years. The domestic debt exchange programme sought to ease Ghana’s debt burden but left financial institutions with impaired assets. Government arrears to suppliers and contractors further exacerbated liquidity strains on banks. Meanwhile, inflation and exchange rate pressures have weighed on borrowers’ ability to service debts.
On inflation, S&P acknowledged rising pressures in 2026 but said they are expected to be contained relative to Ghana’s historical levels. The agency noted improvements in the credibility and effectiveness of monetary policy. It observed that after years of heavy fiscal deficit financing, the government appears to have halted monetary financing of the deficit.
“Nevertheless, we do not expect the low inflation seen at the start of 2026 to last; average inflation is more likely to be at the upper end of the Bank of Ghana’s 6%-10% target, until 2029,” S&P wrote.
The report’s findings come amid a backdrop of Ghana’s ongoing efforts to stabilise its economy. The government’s domestic debt restructuring in 2022 was a response to mounting debt service costs and fiscal deficits. However, the process placed stress on the banking sector, which has struggled with asset quality and capital adequacy challenges since.
S&P’s identification of undercapitalisation in five banks raises questions about the resilience of parts of Ghana’s financial system. While the Bank of Ghana maintains that all institutions meet minimum capital requirements, the rating agency’s assessment suggests some vulnerabilities remain.
The elevated NPL ratio also signals persistent risks to credit quality. At 16.1%, it stands well above levels typically considered healthy in emerging markets. This implies banks face continuing challenges in managing loan portfolios amid economic pressures on borrowers.
S&P’s outlook extends to the broader macroeconomic environment. Inflation containment, fiscal discipline, and monetary policy credibility are cited as factors likely to shape Ghana’s economic trajectory through 2029. Yet the warning about inflation settling near the upper bound of the central bank’s target range implies ongoing cost pressures.
The divergence between S&P Global’s analysis and the Bank of Ghana’s public stance on bank capitalisation points to a complex regulatory and supervisory environment. How authorities address these discrepancies may influence confidence in Ghana’s banking sector and investor sentiment.
The report arrives as Ghana’s financial institutions continue to absorb shocks from the 2022 debt restructuring and the government’s default. The persistence of undercapitalisation and elevated NPLs suggests the sector is still in transition, grappling with the aftermath of macroeconomic turbulence and fiscal imbalances.
According to Joy Online.
