Commercial banks are expected to finance about 60 percent of government capital expenditure (CAPEX) from 2026, placing them at the centre of the development agenda with what the Ghana Association of Banks (GAB) describes as a “double-edged sword” for the economy, according to its 2026 Industry Outlook.
CAPEX is projected to rise sharply from about GH¢32.7 billion in 2025 to GH¢57.5 billion in 2026, before increasing steadily to more than GH¢83 billion by 2029 based on projections from the 2026 Budget Statement cited in the report. The heavy reliance on domestic banks to fund this expansion reflects limited access to foreign financing and a policy preference for local funding, but it also deepens the link between fiscal outcomes and bank balance sheets.
For banks, the arrangement offers both opportunities and risks. Increased government borrowing boosts interest income and provides a predictable outlet for liquidity. However, heavy domestic financing of infrastructure spending risks crowding out private sector credit, as banks redirect funds away from businesses toward sovereign instruments. This reallocation can push up lending rates, weaken private investment and slow broad economic expansion.
“This cautions that while CAPEX can be growth-enhancing, excessive reliance on domestic financing without careful structuring risks may deprive the private sector of adequate credit for growth and expansion,” the Outlook says.
The Ghana Association of Banks (GAB) notes that Ghana’s fiscal position is entering a phase of nominal expansion, driven by rising revenues and higher public spending. Total government revenue is projected to increase from about GH¢230 billion in 2025 to GH¢268.1 billion in 2026, rising steadily to nearly GH¢392 billion by 2029, according to the report.
This improvement is underpinned largely by stronger tax mobilization, with tax revenues projected to grow from GH¢190 billion in 2025 to GH¢224 billion in 2026, reaching close to GH¢335 billion by 2029. GAB argues this revenue trajectory is positive for the banking system because it reduces fiscal uncertainty and strengthens the sovereign’s capacity to meet obligations.
For banks, elevated interest payments have direct implications for sovereign risk assessment. The Outlook notes that constrained fiscal space means any slippage in revenue mobilization could translate quickly into higher financing needs. Interest payments are projected to stabilize around GH¢57 to GH¢59 billion in 2026 and 2027, then rise again to about GH¢70 billion by 2028 and over GH¢80 billion by 2029.
Encouragingly, the outlook suggests some easing of pressure on domestic banks over time. Total government financing needs are projected to decline from about GH¢64 billion in 2026 to around GH¢44.6 billion in 2027 before fluctuating moderately through 2029. While banks are expected to provide GH¢38.3 billion in 2026 and GH¢46.6 billion in 2027, their contribution is projected to fall thereafter to about GH¢29 billion by 2029.
This gradual reduction in reliance on commercial banks is expected to create scope for a measured reallocation of balance sheet capacity toward private enterprises, particularly small and medium sized firms linked to infrastructure delivery, supply chains and productive sectors. Still, the association warns that risks remain, noting that the structure and sustainability of public debt remain central to sovereign risk assessments, which feed directly into banks’ capital adequacy, risk weighting of government exposures and stress testing frameworks.
