Businesses that have been impacted by the COVID-19 pandemic in Ghana are urging the Bank of Ghana to ensure that commercial banks revise their lending rates to reflect the reduction in the policy rate.
According to them, this would enable them to bridge the shortfall in the supply of some goods in the wake of the outbreak.
The Monetary Policy Committee of the Bank of Ghana, last week reduced the policy rate which is the rate at which banks borrow from the central bank, by 150 basis points, from 16 to 14.5 percent.
In addition, there have been some interventions to increase liquidity to facilitate onward lending.
But the President of the Car Rentals Association of Ghana, Seth Yeboah Ocran, told Citi Business News businesses would only benefit if banks were made to adjust their interest rates to make loans affordable.
“You have a facility with the banks and you expect that the agreement is set. But the banks don’t respond to that and I am not sure who is supposed to enforce to make sure that, once the policy rate drops, the banks also drop their interest charges. So, we hear them, but for us it is nothing new. All this goes to them as everything is imported. We buy fuel, spare parts for the vehicles, insurance, or it is a direct cost that you can’t do away with. So, we are pleading that yes, the policy rate has dropped, but who enforces it to make sure the banks respond to it,” he noted.
Impact of COVID-19 on businesses
In Ghana, the novel coronavirus is also having a huge impact on economic activities as different sectors have been shut down in support of adherence to health and safety measures to curb the spread.
The current spread has also complicated supply chains and the drop in equity prices leading to a shortage of some imported goods from countries like the US, China and other European economies.
BoG cuts policy rate to 14.5%
As a result of these challenges, the Monetary Policy Committee reduced the policy rate to 14.5 percent though inflation is still within the margin of eight percent plus or minus 2.
“The dampened global demand could significantly impact Ghana’s crude oil export earnings with major implications for foreign inflows and tax revenues. There is also a likelihood of export restrictions from advanced economies and other emerging market economies which could create supply chain shortages for Ghanaian businesses, with significant impact on imports of intermediate and capital goods, as well as consumption goods,” it said.