Economist and Director at the Institute of Statistical, Social and Economic Research (ISSER), Prof. Peter Quartey has urged the new board of the Bank of Ghana to among other things strengthen the Central Bank’s enforcement and regulatory mechanisms.
This follows the swearing-in of the board and a call by President Nana Akufo-Addo for the board to interrogate and resolve the issue of high-interest rates charged by commercial banks in Ghana.
While congratulating members of the new board, Professor Peter Quartey, stated that steps must be taken to ensure a reduction in the high loan default rate to encourage banks to lower their interest rates.
“The focus of the new board should be on ensuring that the Bank of Ghana strengthens its regulatory and enforcement mechanism. If that is done, certainly the loan default rates will drop, which will impact the final cost of funds of banks. We think that the loan default rate is quite high, an average of 19% to 21%.”
“That is the risk element which has to be factored into the cost of the loan. So if the Central Bank can enforce its regulatory requirements and ensure that we reduce this high default rate, then banks can reduce their operational costs and be able to reduce interest rates,” he added.
Resolve high interest rate concerns – Akufo-Addo urges new BoG board
President Nana Akufo-Addo last week charged the new board of the Bank of Ghana to interrogate the issue of high interest rates in the country.
According to the President, a low interest rate for businesses in the country is critical for ensuring that Ghanaian businesses become and stay competitive.
The President made the remarks at the swearing ceremony of the new board of the Central Bank last Friday.
“Let me use this occasion to urge the Bank to interrogate the issue of high interest rates in Ghana, and how the problem should be addressed to enhance the competitiveness of the private sector. It is surely not right that the Central Bank’s MPR stands at 13.5% while the commercial banks lend to the private sector at rates of 21% and above.”
“This is a gap we have to bridge if we are to realize the vision of a Ghana whose economy is globally competitive. I believe the Bank of Ghana is best placed to lead this process of reflection and action,” he added.
Membership of the board
The Governing Board of the Bank of Ghana is responsible for formulating policies for the achievement of the Bank’s objectives.
The new Board is chaired by Dr. Ernest Addison, Governor of the Bank of Ghana.
The members include Dr. Maxwell Opoku-Afari, First Deputy Governor of the Bank of Ghana, Mrs. Elsie Addo Awadzi, Second Deputy Governor of the Bank of Ghana, Mr. Charles Kofi Adu Boahen, Minister of State at the Ministry of Finance.
The other members are Dr. Kwame Owusu-Nyantekyi, Dr. Samuel Nii-Noi Ashong, Mr. Jude Kofi Bucknor, Mr. Joseph Blignam Alhassan, Mr. Andrew Adinorte Boye-Doe, Mrs. Comfort Ocran, Dr. Regina Adutwum, Ms. Angela Kyerematen-Jimoh and Professor Eric Osei Assibey.
While congratulating the new board, President Akufo-Addo bemoaned the gap between the Central Bank’s Monetary policy rate and average interest rates of commercial banks.