Finance Minister Dr Kwabena Duffuor on Thursday, said government would continue to engage the country’s banks to settle on acceptable interest rate structure that would benefit Ghanaians.
He said despite a lower prime rate and a decline in inflation, the costs of borrowing in the commercial banks were still on the high side. Dr Duffuor, who was speaking at the 50th Annual General Meeting of Association of Ghana Industries (AGI), said interest rates were not coming down as fast as government expected because of high overhead cost in the banks as well as bad loans.
The Industrialists had complained about the big spread between savings
and lending rates and called for government’s intervention to bring the rates down. Dr Duffuor said it was important to note that commercial banks set their lending rates based on certain factors, including operational cost and inflationary expectations.
On the industrial sector, the Finance Minister said although Ghanaian
industries continued to show signs of recovery, production was not growing fast enough to increase its contribution to Gross Domestic Product. It is in this direction that Ghana’s manufacturing policy was designed to enhance the competitiveness and supply capacity of the priority sectors through cluster, export consortia and value chain development.
Dr Duffuor said government expected that the implementation of the
programme would support the growth of the national agro-food and cotton, textile and garment sector and overall industrial economic performance. “The programme will lead to significant growth in agro-food processing, improve efficiency in the use of available production capacities and resources and increase production”, he said.
He assured the industrialists that government would work hand-in-hand
with them to stimulate and support the overall economic growth and generate substantial jobs. Nana Owusu-Afari, President of AGI, lauded government’s efforts to achieve macroeconomic stability, saying the results seen in the continuous stability of the cedi against major currencies and the low inflation showed that the management of the economy was on the right path.
However, he said, the macroeconomic stability and the fiscal
improvements must be reflected in a decline in the lending rates. Nana Owusu-Afari called on the Bank of Ghana to develop policies that
would bring down the lending rates while the commercial banks adopt
appropriate risk appraisal methods to reduce their non-performing loans often cited as the main reason for the high interest rates. He commended government for its intervention in the reduction of