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Sun, Jul

President urges banks to reduce lending rates

Business & Economy

Banks in the country have been urged to reduce their interest rates to complement the efforts being made by Government to create a more stable macro-economic framework in the country.

Banks in the country have been urged to reduce their interest rates to complement the efforts being made by Government to create a more stable macro-economic framework in the country.

 

President Nana Addo Dankwa Akufo-Addo, yesterday, at the commissioning of a $60 million new Ghana Head Office of Ecobank, in Accra said one of the key tenets of moving the country beyond aid project is to ensure that private enterprises get freedom.

He explained that this was what led to the elimination of 14 taxes in the first budget of his government “in order to create a breathing space for the business community.”

According to the President, the first year of his administration has ensured that the Minister of Finance ensures the maintenance of fiscal discipline, with a deficit of 9.3 per cent inherited from the previous NDC administration in 2017 has reduced to 5.6 per cent.

“The projection is that this year we will go even further down to 4.5 per cent,” he assured.

He added that process of restoring fiscal discipline to the economy had gone along with the BoG maintaining hold of the country’s economy, resulting in the growing improvement of the macro economy.

“We have seen inflation decline from 15.6 per cent in 2016 to 11.8 per cent in 2017 and now at the end of January a 10.3 per cent. The monetary policy rate has also been falling from 25.5 per cent in 2016 and now stands at 20 per cent. The 91-day Treasury bill rate has also been falling from. 16.4 per cent in 2016 and now stands at 13.4 per cent,” he said.

However, the President said banking lending rates to the private sector had remained ‘stubbornly high’ averaging between 31.7 per cent and 29.3 per cent within the same period.

“The gap between what is happening to the decline in inflation and the rates being charged is a gap we have to bridge and if we give really substantial complements to the vision that we all share of Ghana as a free entrepreneurial and globally competitive economy, my challenge to you is to complement the efforts of my government which is creating a more stable macro-economic framework by bringing down lending rates,” he said.

“I've said that I'm in a hurry. I'm in a hurry because the Ghanaian people are in a hurry to see an improvement in the quality of their lives. And therefore if we are really to give an impetus to private sector development in our country, lending rates need to come down and they need to come down as a matter of urgency,” he stressed.

President Akufo-Addo added that a strong commitment from Ecobank to tackle this anomaly, including rapid declines of inflation and high lending rates, would be a very good signal to the others.

“It would be the way we can grow our private sector and enable it to create jobs and all the other linkages to grow into an enhancement of our general prosperity. So my challenge, and I’m speaking on behalf of Ghanaians who are not here, is for you to look at reducing banking lending rates as quickly as possible,” he said,

President Akufo-Addo assured that a positive response to his appeal from banks would ensure that “I will definitely lend my voice to an improved banking culture that ensures that people pay back their loans.”

The President congratulated the promoters, the management and Board of Directors of EcoBank for the tremendous strides that have made over the years, typified by this new Ghana Head Office.

He noted that even though the Ecobank is a major pan-African bank, the Ghanaian entity is the most profitable within the pan African context.

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