[ 2016-09-19 ]

BoG worried over high lending rates
The governor of the Bank of Ghana (BoG) Dr. Abdul
Nashir Issahaku has described as worrying the
country’s current average lending rate which is
hovering around 33 percent.

According to the Dr. Issahaku, the central bank
was committed to bringing down lending rates by
tightening monetary policy.

Speaking to Citi Business News, Dr. Issahaku said
the central bank was working hard to bring down
inflation rate, to help reduce interest rates.

“It is a worry and that is why we are working
around the clock to bring down the rates. We will
see the rate coming down if the disinflation
process is consolidated and when inflation begins
to come down substantially, of course it will pull
down interest rate. And that is our mandate to
bring down inflation,” he said.

He stated that the central bank had to embark on
monetary tightening now to control inflation.

“It’s a bitter pill that we are swallowing now
to ensure that stability returns to the economy
and once that happens am sure the interest rate
will come down,”he stressed.

BoG data on lending rates

Latest macroeconomic and financial data from the
BoG showed that the average lending rates in the
country reached an all time high of 33 percent as
at the end of August 2016 compared to the 27.9
percent recorded in the same period in August
2015.

Most banks are now cutting back on lending to
customers due to the rise in Non Performing Loans
(NPL).

NPL on the books of these banks is currently at
19.2 percent as at July 2016 compared to year on
year which is 13.0 percent at the same period in
2015.

Total loans which were given out by banks in the
month of July 2016 was also 17.2 (32.2 billion
cedis) percent dropping hugely from the 25.6
percent record in July 2015 (29.1 billion cedis).

high NPL’s, interest rates and significant drop
in loans and advances to the public.

Economist unhappy with Policy Rate

Meanwhile an economist, Dr. Eric Osei Assibey has
expressed disappointment at the Bank of Ghana’s
(BoG’s) decision to maintain the Policy Rate at
26 percent.

Dr. Osei Assibey stated that the decision to
maintain the policy rate at 26 percent will
continue to affect the cost of borrowing,
restricting the ability of businesses to expand.

He was of the view that with the current harsh
conditions that businesses go through, the
committee could have reduced the rate to help
interest rates come down for businesses to expand
their operations.

Source - citibsinessnews.com

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