• About
  • Advertise
  • Privacy Policy
  • Contact
Friday, May 20, 2022
  • Login
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Job Vacancies
No Result
View All Result
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Job Vacancies
No Result
View All Result
The Vaultz News
No Result
View All Result

Cost Of Borrowing Hits 7th Month High, Likely To Go Up Further

March 28, 2022
Stephen KotochiebyStephen Kotochie
in Economy, Sub Top Stories1
0
Cost Of Borrowing Hits 7th Month High, Likely To Go Up Further

Average cost of borrowing continues to rise in the country, increasing to a seventh-month high in February 2022, up from 20.51 percent in August 2021.

Data from the Bank of Ghana (BoG) show that the average lending rate in the country is gradually inching up since August last year, rising by 0.48 percentage points to 20.52 percent in February this year compared to the rate recorded in December 2021. The Bank of Ghana attributed the recent upward trend in cost of borrowing to rising interest rates at the interbank market.

 “The weighted average interbank rate inched up from 12.68 percent in December 2021 to 12.96 percent in February 2022. The increase in rates at the interbank market level was transmitted to the retail-end of the market, resulting in average lending rates of banks inching up marginally to 20.52 percent in February 2022 from 20 percent recorded in December 2021”.

Bank of Ghana

However, compared to the corresponding month last year, average lending rates have declined by 0.48 percentage points, down from 21.0 percent in February 2021. In terms of deposit rates, not much has changed over the past one year as both demand and savings deposit rates remained constant at 2.62 percent and 7.62 percent respectively.

RelatedPosts

Africa Beyond Aid: Lazy Economies Cannot Have Luxurious Expenditure- GUTA

We Need To Look Critically At How We Fight Inflation –  Togbe Afede XIV

Producer Price Inflation Rose To 31.2% In April 2022

Credit to the private sector

Despite the rising cost of borrowing in the country, credit to the private sector continued to recover, consistent with the rebound in economic activities. In nominal terms, annual growth in private sector credit increased significantly to 17.1 percent in February 2022 compared with 7.4 percent in the same period of 2021. In real terms, private sector credit grew by 1.2 percent relative to a contraction of 2.7 percent, over the same comparative period.

addisson new
Dr. Ernest Addison – Governor of the Bank of Ghana

BoG’s latest credit conditions survey revealed tightened credit stance on loans to enterprises. However, the Central Bank disclosed that “demand for credit by households and small and medium sized enterprises are projected to increase in the near to medium-term”.

Even though Bank of Ghana is forecasting an increase in demand for credit by the private sector in the medium-term, recent monetary policy measures announced by the Regulator are all pointing to an increase in the average lending rate which is already at a seven-month high. In an attempt to tame inflation, the Monetary Committee of the Bank of Ghana raised its policy rate by 250 basis points to 17 percent in its 105th meetings held in March this year.

Other monetary policy measures

In addition to the upward policy rate adjustment, the Bank of Ghana announced other monetary tightening measures which are expected to be enforced by universal banks, effective April 1, 2022. The regulator has announced an increase in the Cash Reserve Ratio to 12 percent and also reset the Capital Conservation Buffer to the pre-pandemic level of 3 percent, making the Capital Adequacy Ratio a total of 13 percent. Moreover, the provisioning rate for loans in the ‘Other Loans Exceptionally Mentioned’ (OLEM) category is reset to the pre-pandemic level of 10 percent.

These measures, which are aimed at mopping up excess liquidity in the system, will ultimately result in higher borrowing rates at the retail level which will have a growth-crippling effect on the economy. Private sector is likely to be crowded-out as the banks may see the high policy rate lucrative and may therefore, invest a chunk of their funds in holding government bonds. This will push interest rates even higher, should BoG’s projected increase in credit demand by the private sector materialized.

Already, indicators from the Bank of Ghana are pointing to a slowdown in the pace of recovery since Q4 2021 to the end of the first month this year. This means that the Central Bank’s measures, even though may contain inflation, may have an adverse impact on growth and job which will ultimately impact on standards of living in the country.

READ ALSO: GMA Welcomes Gov’t Withdrawal of Compulsory Testing for Fully Vaccinated Persons

Tags: Bank of GhanaCOVID-19economyGhana NewsInteract ratePolicy rate

Send your news stories to [email protected] and via WhatsApp on +233543050759.

Related Posts

President of the Ghana Union of Traders’ Association (GUTA), Dr Joseph Obeng, has called on African countries to refrain from being political with their economies, insisting that lazy economies cannot have luxurious expenditure.
Sub Top Stories1

Africa Beyond Aid: Lazy Economies Cannot Have Luxurious Expenditure- GUTA

May 20, 2022
We Need To Look Critically At How We Fight Inflation - Togbe Afede XIV
Economy

We Need To Look Critically At How We Fight Inflation –  Togbe Afede XIV

May 20, 2022
Producer Price Inflation Rose To 31.2% In April 2022
Economy

Producer Price Inflation Rose To 31.2% In April 2022

May 19, 2022
Cost-Push Pressures To Persist Until Third Quarter – Databank Research
Economy

Cost-Push Pressures To Persist Until Third Quarter – Databank Research

May 19, 2022
A ‘Food Secure and Healthy Ghana’ Can Never Be Attained Without Huge Investments in STI- Prof. Eric Danquah
Agribusiness

A ‘Food Secure and Healthy Ghana’ Can Never Be Attained Without Huge Investments in STI- Prof. Eric Danquah

May 19, 2022
MPC Commences Meetings Today, IEA Calls For A 200 Basis Point Hike In Policy Rate
Economy

MPC Commences Meetings Today, IEA Calls For 200 Basis Points Hike In Policy Rate

May 18, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Previous Post

Skyrocketing Food Prices Choke Ghanaians

Next Post

Economic Measures, “Fantastic Way Of Trying To Deceive People”- Murtala Mohammed

Sign up for The Vaultz analytic wire

Get weekly news analysis from top editors at The Vaultz and stay informed on trending economic and business issues from across the globe.
GHAMRO, as the Chairman of the organization, Rex Omar, has revealed that his outfit has revamped its royalty collection system
Entertainment

GHAMRO Cautions Music Users to Obtain Copyright License

by Dorcas DamehMay 20, 2022
The Idea Of Parallel Government Treasonable- Adib Saani
General News

Border Officers Helping People Move In and Out Of Ghana Dangerous- Adib Saani

by Priscilla KorantengMay 20, 2022
Mercedes AMG Confirms Vision For Electric Future
Wheels

Mercedes AMG Confirms Vision For Electric Future

by Stephen M.CMay 20, 2022
Country Director for Global Professional HR Certification, Dr Jeff Bassey, has revealed that salaries for employees in an organisation is a critical engagement drive.
General News

International HR Day: Compensation is a critical engagement drive- HR Expert

by Angeller AshongMay 20, 2022
African Development Bank Board Approves $1.5 Billion Facility To Avert Food Crisis
Africa

African Development Bank Board Approves $1.5 Billion Facility To Avert Food Crisis

by Stephen KotochieMay 20, 2022
Mechanical Engineer Supervisor
Job Vacancies

Mechanical Engineer Supervisor Needed For Hiring

by thevaultzMay 20, 2022
GHAMRO, as the Chairman of the organization, Rex Omar, has revealed that his outfit has revamped its royalty collection system
The Idea Of Parallel Government Treasonable- Adib Saani
Mercedes AMG Confirms Vision For Electric Future
Country Director for Global Professional HR Certification, Dr Jeff Bassey, has revealed that salaries for employees in an organisation is a critical engagement drive.
African Development Bank Board Approves $1.5 Billion Facility To Avert Food Crisis
Mechanical Engineer Supervisor
Snow
FIND OUT MORE

The Vaultz News

Copyright © 2021 The Vaultz News. All rights reserved.

Navigate Site

  • About
  • Advertise
  • Privacy Policy
  • Contact

Follow Us

No Result
View All Result
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2D
  • Job Vacancies

Copyright © 2021 The Vaultz News. All rights reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In