Ghana Reference Rate Drops to 15.9% in December, Easing Borrowing Costs for Businesses

Ghana’s benchmark reference rate for bank lending has fallen sharply in December, offering a welcome reprieve for businesses and consumers ahead of the year-end. According to the Ghana Association of Banks, the Ghana Reference Rate (GRR) dropped from 17.93% in November to 15.9%, marking the steepest monthly decline in 2025. This 200-basis-point fall reflects improvements in several key macroeconomic indicators that determine the rate.

Bank treasurers attribute the decline to the Bank of Ghana’s recent 350-basis-point cut in the Monetary Policy Rate (MPR) to 18%, combined with moderating Treasury bill yields and easing interbank rates. These factors collectively pulled the GRR downward, signaling a shift toward more favorable credit conditions after months of tight monetary policy.

The lower GRR is expected to reduce borrowing costs across the banking sector, with commercial banks likely to adjust their lending rates in line with the new benchmark. Businesses taking out loans in December will benefit directly, as new loans will be priced against the reduced rate, offering noticeably lower interest charges compared to November. Borrowers on fixed-rate loans will not see immediate changes, but those with variable-rate agreements may experience marginal reductions depending on their bank’s pricing methodology.

This development comes at a critical time for businesses that have struggled with tight liquidity and high borrowing costs throughout 2025. SMEs, in particular, have felt the pinch as the central bank’s contractionary policies constrained loan access. However, the Bank of Ghana’s latest Monetary Policy Report indicates a gradual easing, with average lending rates falling from 26.6% to 24.2%, hinting at an improving credit landscape.

Analysts caution that while the GRR drop is a positive sign, it may take time for all banks to adjust their lending rates fully. Nonetheless, the move represents a turning point for the local credit market. With the cost of capital now trending downward, December 2025 may provide businesses with the most favorable lending conditions seen this year, offering a rare opportunity to invest, expand, or refinance at lower rates.

source: citi newsroom