With interest rates on short-term notes currently hovering around 25 percent, the International Finance Corporation (IFC) does not see the need to go ahead with its planned sale of a GH¢2 billion in Ghana.
According to Jindong Hua, Vice President of IFC, the corporation will however be monitoring the market to see when it would be appropriate to issue the bond.
The high interest rate regime is already taking its toll on various sectors of the economy.
IFC is a member of the World Bank Group and the largest global development institution focused on the private sector in developing countries.
Proceeds from the bond auction were expected to be used to support small businesses in the country.
‘High nominal interest rates stymies the appetite for the private sector to borrow because when plug in 20 percent or more interest rate to any project profitability becomes difficult,’ Mr Hua commented.
Analysts have attributed the high cost of borrowing by government to the rising inflation rate and the depreciating cedi. And investors are said to be asking for higher interest mainly because of the rising deficit and weakening value of the Ghana cedi.
Analysts have further expressed fears that Ghana might pay a higher rate if it carries on with a $1 billion Eurobond, which it promised to issue soon.
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