The Ghana Association of Bankers has indicated that it has begun work with the Bank of Ghana, BOG, on a new framework to guide lending rates in the country.
The new framework to be known as the Ghana Reference Rate is expected to influence the determination of interest rates by commercial banks in the country.
President of the Bankers Association, Alhasan Andani, said this should help bring some transparency in setting lending rates.
Speaking with JoyBusiness after addressing a session on “SME Financing” at this year’s Annual New Year School at the University of Ghana Legon Mr Andani said, “…We are working with the Central Bank in terms of what we call the new Ghana Reference Rate will be.”
He said, “The parameters that they [BOG] have put into the new Ghana Reference Rate should help to bring down the base rate ... and also there will be modalities around how to moderate margins and we should see a decline."
According to the Bank of Ghana, the average interest rate is about 25.7%.
The high lending rates in Ghana, in spite of historically low rates worldwide, are of monumental national importance due to its implications for the development of the private sector.
Some analysts blame competitive government borrowing as a major cause of high lending rates in the country.
The country's high budget deficit for a long time, which is increased during election years, is financed by borrowing both domestically and internationally.