The Governor of the Bank of Ghana (BoG), Dr Johnson Pandit Asiama, has backed COCOBOD’s transition from syndicated offshore loans to local market financing, describing the move as a major policy shift that will eliminate the massive liquidity injections associated with the old financing model and strengthen the Central Bank’s efforts to maintain price stability.
According to him, unlike the previous arrangement under which the Bank of Ghana’s balance sheet experienced significant liquidity injections during the fourth quarter to support cocoa purchases, the new financing framework would mobilise funds already within the domestic financial system, thereby easing pressure on monetary policy.
Speaking during the question-and-answer session after announcing the outcome of the 131st Monetary Policy Committee (MPC) meeting in Accra yesterday, Dr. Asiama said the reform was not only beneficial for COCOBOD, but also for the country’s broader macroeconomic management.
“They have now moved from the syndicated loans to local market financing. I think it’s rather a good one. What it means is they are mobilising money locally to fund the purchases of cocoa for export, which we believe is a good thing. It is one thing we should have done long ago,”the Governor said.
He explained that the previous cocoa financing model relied heavily on syndicated loans arranged through foreign banks, creating sizeable liquidity injections into the domestic economy whenever the Central Bank supported the transactions.
“We used to have the pre-financing regime where, in the fourth quarter, we had that huge liquidity injection on the balance sheet of the Central Bank.
“That will no longer be the case, given that this is going to be money that is mobilised within the system,” he stated.
According to Dr Asiama, the new financing structure would also reduce dependence on commercial banks whose lending capacity is constrained by their capital base.
“The reliance on banks to fund COCOBOD, there’s a limit to how much the banks can fund because of their capital base. So moving to the capital markets to raise commercial paper to fund COCOBOD purchases, I believe, is the right way to go,” he added.
Supports inflation objective
The Governor’s remarks came as the MPC unanimously maintained the Monetary Policy Rate at 14 percent, concluding that the current stance remained appropriate to guide inflation back into the medium-term target band while supporting economic growth.
Although headline inflation increased from 3.7 percent in May to 5.3 percent in June, Dr. Asiama said the rise was largely driven by temporary factors, including base effects and higher transport fares following the spike in global crude oil prices.
He maintained that inflation was still expected to remain on a downward path despite emerging external risks.
Responding to a question on whether the recent rise in inflation signalled the beginning of a new inflation cycle that could require higher interest rates, the Governor said the Bank was not convinced that current developments warranted tightening monetary policy.
“What that means is that the impact is expected to continue. We are seeing core inflation also picking up right now.
“There have been some changes in some of the underlying factors, for which reason we think policy has to take these into account,” he explained.
“That notwithstanding, based on our projections, we believe that in the outlook inflation will still fall. But that again requires that we stay vigilant on the risks going forward.”
He identified renewed tensions in the Middle East, particularly developments around the Strait of Hormuz, together with possible upward adjustments in utility tariffs, as the biggest upside risks to inflation.
“If you ask me about my sense of the biggest threat to inflation going forward, I can give you a number of them. The global risk is the first one.
“Whatever happens in the Strait of Hormuz, if it turns out to be persistent, that could impact the outlook. Utility price adjustment also impacts inflation going forward. So those are the upside risks the Committee considered,” he said.
Economy remains resilient
Despite heightened global uncertainty, Dr. Asiama said Ghana’s economy continued to demonstrate resilience.Real Gross Domestic Product (GDP) expanded by 6.4 percent in the first quarter of 2026, supported mainly by strong growth in the services and industrial sectors.
The Bank’s Composite Index of Economic Activity also recorded annual growth of 13.4 percent in May 2026, compared with 4.4 percent during the same period last year.
According to the Governor, stronger international trade, increased industrial production, rising tourist arrivals and expanding private sector credit contributed to the improved economic performance.
He also noted that confidence among businesses and consumers had improved considerably amid declining lending rates and expectations of sustained economic growth.
Private sector credit surges
Dr Asiama disclosed that private sector credit grew by 41.2 percent in June 2026, compared with 8.6 percent during the same period last year, reflecting stronger demand for credit and lower borrowing costs.
He expressed optimism that lending to businesses would continue to increase as banks gradually reduced their dependence on investments in government securities. “We believe that we are in a position, over time, as rates continue to fall, we will see greater recourse to private sector lending by the banks,” he said.
The Governor added that the Central Bank was working with commercial banks to strengthen their risk management systems while introducing new digital credit initiatives aimed at expanding access to finance.
“We are working with banks to strengthen their risk management frameworks to be able to give greater credit. Several other measures we are introducing should see private sector credit at higher levels.”
GoldBod reforms
Dr Asiama also disclosed that discussions were ongoing regarding a new financing framework for the Ghana Gold Board (GoldBod), following the Bank of Ghana’s decision to step away from directly financing the institution’s gold purchasing activities.
He explained that government funding, capital market financing or a combination of both remained under consideration.
“From where we are now, GoldBod has a number of choices. Either government takes up its funding entirely or there is a resort to the markets. We are still in discussions, and I’m sure the market will be informed very soon,” he said.
According to the Governor, moving away from these quasi-fiscal activities would reduce pressure on the Central Bank’s balance sheet while allowing GoldBod to continue supporting Ghana’s foreign exchange management strategy.
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