Ghanaians will have to endure high interest rates over the next two years, Gilbert Hie, Managing Director of Societe General, has stated.
No miracle is capable of reducing interest rates over the next couple of years considering the country’s high level of debt and high government borrowing, according to him.
Mr. Hie disclosed this when he took his turn at ‘Facts Behind the Figures’ programme at the Ghana Stock Exchange (GSE) in Accra yesterday.
Interest rates in the country are currently hovering around an average of 31 percent, affecting the profit margins of businesses.
Mr. Hie partly blamed government for contributing to the high interest rate, stating that government within a period of six months has borrowed GHc24 billion at interest rate of 25 percent, coupled with high debt level of the country, which has reached 67 percent of Gross Domestic Product (GDP).
‘I fully understand that it is very painful and difficult for anybody to survive with the high interest rates, but unfortunately it will continue because there is no other solution. We will be staying with high interest rates for the next two years,’ he said.
However, he expressed the hope that the International Monetary Fund (IMF) bailout would help to curtail the economic crunch in the country and consequently bring inflation down.
Mr. Hie said, ‘The IMF support is not a huge amount to help save the situation but what is positive about the IMF deal is that it will contribute in building trust in Ghana’s economy.
‘This is because IMF will not come alone. It is coming with other donors from America and Europe as well as public and private insurance firms that can insure infrastructure financing in the coming years.’
The positive movement will contribute positively to decreasing interest rate but not quickly, he said.
The MD also called on government to spend less and mobilize more taxes.
By Cephas Larbi
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