• About
  • Advertise
  • Privacy Policy
  • Contact
Monday, May 16, 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
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
No Result
View All Result
The Vaultz News
No Result
View All Result

Fiscal Consolidation, Key in Addressing High Lending Rates – BoG Governor

October 26, 2021
Stephen KotochiebyStephen Kotochie
in Economy, One Top Story
0
Fiscal Consolidation Key in Addressing High Lending Rates – BoG Governor

Dr. Ernest Addison, Governor of the Bank of Ghana

Dr. Ernest Addison, Governor of the Bank of Ghana (BoG) has stated that a strong fiscal consolidation is needed to reduce the high cost of borrowing in the country. According to him, the strong demand from the side of the budget is one of the lingering problems that the country faces in its attempt to reduce the lending rates in the country.

The Governor however, assured that the government is working assiduously to bring down the budget deficit which would complement the efforts of the Central Bank to reduce the cost of borrowing in the country.

“If we were seeing greater fiscal consolidation, the demand for loans or demand for bonds from the banks would be going down, and you would expect that the lending rates would also follow.

“Therefore, the issue of fiscal consolidation is also key in addressing this concern of high lending rates. We are working at it and government is working, doing their part by bringing down the budget deficit. It is not easy but they are pushing at it”.

Dr. Ernest Addison

The Governor highlighted that Ghana has, however, made significant strides in reducing lending rates over the years.  Dr. Addison stated that lending rates have declined from around 26 to 27 percent since 2016, and currently hovering around 20 percent.  This, he said, “is more than 600, 700 basis points reduction over the past four years. This means there has been significant improvements”.

RelatedPosts

Introduce Cash Transfer Scheme To Cushion Citizens Against Rising Cost of Living –  Dr. Opoku

ISSER Urges Gov’t to Bring Back Tollbooths As a Fiscal Measure

Collateralizing E-levy Will Create Problems for Future Governments- Prof Bokpin

Varied reasons for high lending rates

In the quest to reduce the high costs of borrowing in the country, Dr. Addison highlighted the need to understand the factors that drive the country’s lending rates. The BoG Boss stressed two main factors, saying, “the macro conditions contribute to it, and the banking sector contributes to it”.

He highlighted the significance of running a balanced budget and its implications on lending rates in the country.

“If we run a balanced budget in Ghana, that is, our revenues equals to our expenditure, the banks are holding 80 billion Ghana Cedis in government bonds, where do you think that money would be and what do you think would happen to interest rates in that context?”

Dr. Ernest Addison

Rationale for raising the capital requirement for banks

In terms of the efficiencies of the banks, the Governor underscored that his outfit increased the capital requirement for banks which led to some mergers and acquisitions.  He explained that because of the economies of scale that comes with larger banks, the expectation is that the unit cost of banking would go down and when that occurs, the gains will reflect in lower lending rates.

“This is the thinking behind raising the capital requirements, which shows some progress in trying to address this question of lending rates. We are working to ensure that the banks are becoming more efficient so that some of the efficiency gains will translate into lower lending rates.

“We have also put in place the credit infrastructure to help so that the banks would use them. The credit reporting systems and collateral arrangements are all supposed to help reduce the risks associated with lending and all of those measures should help bring lending rates down”.

Dr. Ernest Addison

Dr. Addison made these clarifications whilst responding to questions on the specific steps the BoG is taking to ensure that the gap between the policy rates and the lending rates is closed. The issue of the wide gap between lending rates and the policy rates has once again become topical with the President tasking the newly inaugurated Board of the Bank of Ghana to work to close the gap.

READ ALSO: EU and Ghana Have Good Relations in The Agriculture Sector – Ministry of Agriculture

Tags: balanced budgetBank of GhanaDr. Ernest AddisonFiscal consolidationlending rates

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

Related Posts

Introduce Cash Transfer Scheme To Cushion Citizens Against Rising Cost of Living - Dr. Opoku
Economy

Introduce Cash Transfer Scheme To Cushion Citizens Against Rising Cost of Living –  Dr. Opoku

May 16, 2022
Bring Back the Road Tolls Now- Economist Charges Government
Economy

ISSER Urges Gov’t to Bring Back Tollbooths As a Fiscal Measure

May 15, 2022
Collateralizing E-levy Will Create Problems for Future Governments- Prof Bokpin
Economy

Collateralizing E-levy Will Create Problems for Future Governments- Prof Bokpin

May 14, 2022
Ghana: US$751.5 Million AfDB-Sponsored Projects Underway
Economy

Ghana:US$751.5 Million AfDB-Sponsored Projects Underway

May 14, 2022
I Have Given Up All Hope In This Government — Economist
Economy

I Have Given Up All Hope On This Government — Economist

May 13, 2022
Ghana Will Not Seek IMF Support - Ken Ofori Atta
Economy

Ghana Will Not Seek IMF Support – Ken Ofori-Atta

May 12, 2022

Leave a Reply Cancel reply

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

Previous Post

NDC rubbishes claims by EC on cost of elections per voter

Next Post

150,000 Visitors are Expected to Grace the ‘December in GH’ Events – MoTAC

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.
McDonald’s to Exit Russia for Good After 30 Years
USA

McDonald’s to Exit Russia for Good After 30 Years

by Edem NyonatorMay 16, 2022
Ashantigold SC, Inter Allies FC Demoted To Division Two For Match Fixing
Sports

Ashantigold SC, Inter Allies FC Demoted To Division Two For Match Fixing  

by Stephen KotochieMay 16, 2022
Fidelity Bank launches ‘Yenko Dubai’ Promo for its agents
Banking

Fidelity Bank launches ‘Yenko Dubai’ Promo for its agents

by Stephen M.CMay 16, 2022
We Need to Identify Ways to Make up for Potential Future Gaps- FAO
Asia

We Need to Identify Ways to Make up for Potential Future Gaps- FAO

by Deborah Dzifah TamakloeMay 16, 2022
Nkoranza Shooting: Albert Was Targeted- Nkoranza MP
General News

Nkoranza Shooting: Albert Was Targeted- Nkoranza MP

by Priscilla KorantengMay 16, 2022
Nollywood actress Dorcas Shola-Fapson(DSF) has been called out by the stylist who dressed her for the just-ended Africa Movies Viewers Choice Awards.
Entertainment

Dorcas Shola-Fapson And Stylist Drag Each Other Over AMVCA Dress Debts

by Dorcas DamehMay 16, 2022
McDonald’s to Exit Russia for Good After 30 Years
Ashantigold SC, Inter Allies FC Demoted To Division Two For Match Fixing
Fidelity Bank launches ‘Yenko Dubai’ Promo for its agents
We Need to Identify Ways to Make up for Potential Future Gaps- FAO
Nkoranza Shooting: Albert Was Targeted- Nkoranza MP
Nollywood actress Dorcas Shola-Fapson(DSF) has been called out by the stylist who dressed her for the just-ended Africa Movies Viewers Choice Awards.
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

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