Renowned economist, Kwame Pianim, says the failure of government to pay attention to micro-economic indices could be as disastrous as taking a purgative and going to sleep.
“You will wake up in a mess,” he said.
Mr Pianim identified the depreciation of the cedi and interest rates as some of the micro-economic factors undermining economic growth and killing businesses in the country.
Kwame Pianim recalled that when he worked at the Finance Ministry in the ’70s, interest rate was 7% and inflation rate was 3%.
“Is it believable in Ghana now?” he wondered.
Interest rates on loans in the country are currently hovering around an average of 31%, affecting the profit margins of businesses.
It makes cost of borrowing prohibitive and starves businesses of funds to expand.
“If we take care of the micro-economics…everything else will be added” he advised at a meeting organized by the Ministry of Trade and economic think tank, Institute of Economic Affairs, IEA.
He recalled how businesses in patriotic solidarity paid the painful price of remaining faithful to the cedi after government directed that all transactions in dollars should cease.
“We woke up one day, the cedi had depreciated significantly, you had lost 40% of the dollar equivalent of your shareholder fund”, the seasoned economist lamented.
Ghana is currently on a three-year IMF programme following worsening fiscal discipline.
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