It’s a new dawn at the Bank of Ghana (BoG) as Dr. Johnson Asiama takes over as Governor, and barely a day into his tenure, he is already facing calls to prioritize exchange rate stability and lower interest rates.
Economist and Director at the Institute of Statistical Social and Economic Research (ISSER) at the University of Ghana, Prof. Peter Quartey believes to ease economic pressures on individuals and businesses in the private sector, proper attention must given to the exchange rate and interest rate.
Dr. Johnson Asiama has already indicated his priority areas will include policy stability and independence of the Central Bank. However, Prof. Quartey charges the new leadership to ensure that the cost of borrowing is reduced while the ever-depreciating cedi is fixed.
The economist maintains that the prevailing interest rate in the economy is above Ghana’s peers in the sub-region and also inimical to business growth. He further adds the rise in non-performing loans is also a threat to low interest rates which is further worsened by unstable exchange rates.
He therefore calls on the new Governor to stick to the core mandate of the Central Bank and implement measures that will ensure low interest and price stability. This he says will create the enabling environment for the private sector to flourish.
“Interest rates are recently high compared to what you find in the sub-region. Bank of Ghana’s mandate is to ensure price stability, exchange rate stability, and interest rate stability so that the private sector can borrow and expand credit. At the last monetary policy committee meeting, it came out clearly that non-performing loans are on the rise. It’s around 21.2%. And that is not good. Because this was specifically translating to the cost,” he advised in an interview monitored by The High Street Journal.
He suggested, “He has to engage the banks. He has to engage the credit reference agencies. He has to engage the relevant authorities to ensure that we reduce the incidence of non-performing loans. That goes into the cost of credit so that credit will be cheaper and affordable.”
For Ghanaians and businesses, lower interest rates mean cheaper loans, giving companies the opportunity to borrow to expand, hire more workers, and contribute to economic growth and development.
Additionally, a stable exchange rate will prevent soaring inflation which leads to increases in fuel prices and the cost of goods. This reduces the cost of living and makes life easier for consumers.
Prof. Quartey is therefore calling on the new Bank of Ghana Governor to take bold steps to stabilize the economy, ease lending conditions, and restore confidence in the financial system.
