The Ministry of Trade and Industry is to soon present a paper to cabinet to propose solutions aimed at reducing the current lending rates in the country.
According to the Ministry, reducing the lending rates will foster private sector growth and create employment as well.
The sector Minister, Dr. Ekow Spio Garbrah described as frustrating, the astronomical charges of between 30 to 100 % demanded by commercial banks.
Though he admitted that financial institutions’ resistance to government’s participation, Dr. Spio Garbrah also says the situation persists due to the lack of collaboration of other ministries.
“In Ghana interest rates hover around 30 to 100 percent and that is a recipe for killing businesses. Though the Ministry of Trade and Industry has been fighting this over the years, other ministries don’t seem to be as interested as I thought they should be,” he stated.
Some analysts have blamed the 26% policy rate of the central bank and the Treasury bill rate close to 23% does not show any sign of commitment from government.
Ghana said to have one of the highest interest rates in the world, with average rates hovering around 35% for commercial banks and 70% for Micro-financial institutions.
A 15 member expert team made of economists, representatives from the Finance Ministry, Bank of Ghana and think-tanks have been put together to prepare the proposals on how to achieve a consensus on a reduced lending rate.
Dr. Ekow Spio Garbrah says he is optimistic the committee will be able to reduce the lending rate of most banks in the country.
“We have created an expert group of some top economists from the University of Ghana, Ministry of finance and Bank of Ghana with some think tanks,”
“We have just prepared a cabinet paper which will be going to cabinet this week, talking about the various things the Bank of Ghana and other institutions can do to find a way of controlling interest rates,” he stated.
“The proposal will amongst other things also reduce the spread between the savings rate and the lending rates of most banks which currently is unfair to businesses,” Dr. Spio Garbrah added.
By: Norvan Acquah – Hayford
