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 rates 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 percent to 21 per cent.”

“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.

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 in ceremony of the new board of the Central Bank last Friday.

Dr Ernest Addison, Governor of the Bank of Ghana, in response assured the President of the board’s determination to continue to implement sound policies to ensure macroeconomic stability.

The policies he said would be supported by a safe, sound, efficient and stable market-based financial system, as efforts were being made to build a strong, prosperous and inclusive nation.

He said the Bank for the past four years had implemented prudent monetary policies which had yielded positive results.

“Despite the COVID-19 shock, inflation has eased to single digits and currently within the medium-term target band; the exchange rate has remained relatively stable, supported by adequate reserve levels that currently stands at about five months of import cover. In addition, we have also implemented financial sector policies which have revamped the banking sector that is now well-capitalised and well positioned to support the economic recovery and revitalisation process from the pandemic,” he said.

Dr Addison said though the Ghanaian economy was on the gradual recovery path from the adverse effects of the COVID-19 pandemic, there were, however, uncertainties in the domestic economic environment, which called for prudent policies to firm up the recovery process and protect livelihoods and jobs without stoking inflationary pressures.