By Francis Ntow
Accra, June 25, GNA – The government has been urged to introduce a scheme that will enable the Bank of Ghana (BoG), to give direct lower interest rate loans to selected productive businesses in the country.
Economists, Dr Daniel Anim-Prempeh and Mr Alhassan Andani said doing so, enables businesses to increase their production capacities, and sell at affordable prices, thereby, stimulating the local economy, and improving living standards.
They spoke to the Ghana News Agency in separate interviews on recent developments in the economy amid the implementation of the country’s US$3 billion loan-support programme with the International Monetary Fund (IMF).
The Monetary Policy Committee (MPC) of the Central Bank kept the interest rate at 29 per cent at its May 2024 MPC briefing, citing the high global interest rate environment and a downward pressure on the Cedi as key reasons.
However, the Economists, said the current interest rate on loans was expensive for businesses, in particular, urging the government to ensure that it was brought down to support industrial growth.
Dr Anim-Prempeh, a Chief Economist with Policy Initiative for Economic Development (PIED), asked the government to ensure that the inflation and exchange rate gains seen in the past few months were consolidated.
“Most, importantly, the government must deliberately identify and support businesses that would propel growth, and come up with an initiative where the Bank of Ghana can give loans to businesses at a 10 per cent interest rate for the next five years,” he said.
He recommended that the businesses in the agriculture value chain and the pharmaceutical industry be targeted with such an initiative to make them expand their production beyond the borders of Ghana and attract foreign inflows.
That, he said, was necessary because many Ghanaian businesses had now resorted to buying from places like China to sell, rather than producing locally, due to the expensive nature of loans, which they struggled to repay.
Mr Andani, who has over 20 years of experience in banking said, “There’s no way you can achieve development with an interest rate at 35 per cent; it’s too expensive and would not make our businesses globally competitive.”
He explained that high interest rates were often symptoms of money printing, not producing enough goods and services, and poor fiscal and monetary policy measures, saying, “We’ve got to be pragmatic and bring down the interest rate.”
Meanwhile, Dr Alex Ampaabeng, a Deputy Finance Minister, has said the government would in July, launch an initiative with a GHS2.4bn grant from the Development Bank Ghana (DBG) and other partners to cushion businesses.
The Small and Medium-sized Enterprise (SME) Growth and Opportunity programme, he said was to ensure that about 100 private sector SMEs were well-resourced to grow, impact the country’s revenue performance and create jobs.
“This is not the usual give the grant and sit back [initiative]… and it will hinge on key sectors of the economy, where our strengths are, including agriculture,” the Deputy Finance Minister, said.
GNA