Alan Kyerematen, Minister-designate for Trade and Industry, says the Bank of Ghana (BoG) must reduce its policy rate to enable operators in the private sector to borrow at lower interest rate from commercial banks to grow their businesses.
According to him, the high policy rate has resulted in high interest rates from commercial banks in the country, which makes it difficult for private businesses to borrow to support their ventures.
The Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) has maintained the policy rate at 25.5 percent.
According to the committee, the policy rate was maintained to enhance fiscal consolidation.
Ghana’s interest rates are among the highest in the world, with average base rates hovering around 27 percent.
Mr Kyerematen, who appeared before the Vetting Committee of Parliament yesterday, said “The BoG must start looking at reducing its policy rate to ensure interest rates level on loans from commercial banks are reduced.”
He said, “We have no choice than to ensure that interest rates come down, so whether we like it or not the BoG policy rate has to come down.”
Mr. Kyerematen explained that banks were charging high interest rates because of the risk profile of the borrowers.
He added that “with the kind of intervention we are putting in place, I can assure you that the risk profile of companies would improve. That will be a signal for banks to reduce interest rate.”
Provide Capital For Businesses
Mr. Kyerematen gave the assurance that government will facilitate access to medium and long term capital to enhance the private sector growth, explaining that providing capital is key to realizing the One-District- One-Factory promise made by the NPP administration during the campaign.
He said providing capital for the private sector will address challenges SMEs face in raising credit through commercial banks.
“We all recognize that it is not as if the banks in this country do not provide credit and financing, but we know it is the tenure of the credit they provide which is a challenge for our companies,” Mr. Kyerematen added.
By Cephas Larbi