Economist, Prof Cletus Dordunoo has called on the Bank of Ghana(BoG) to use moral suasion to compel banks to reduce their interest rates to appreciable levels.
According to him, the measures so far implemented by the Bank of Ghana such as the continuous reduction of the policy rate , and setting the Ghana Reference Rate are laudable but must translate on the ground.
He argued that the introduction of the Ghana Reference Rate which is currently at 16. 19 percent is yet to help in reducing the cost of borrowing.
Prof Dordunoo warned that the rising interest rates if not checked, will eventually drive investors away from the country.
“Despite the many interventions by the BoG and government to create a favorable macroeconomic environment, it is taking too long for the banks to respond to the environment and reduce their lending rates”.
“In the few cases where some banks have responded, it took one year and others two years, it has been very minimal though .But you will still see the lending rates are high, this is where I believe we are not doing the best we can”.
He appealed to the central bank to adopt other working measures that may compel the banks to positively respond to the systems.
“I think it’s time that Bank of Ghana uses one of its instruments called moral suasion to begin to see some changes and reduction in the lending rates because it’s too high,” he said.
Prof Dordunoo made these comments on the sidelines of the 8th Annual General Meeting of FirstBanc Financial Services.
Results Announced at the AGM (First Fund)
First Fund posted an impressive performance in 2017, outperforming the benchmark 91 day Treasury- bill rate.
It also topped the charts of money market mutual funds in Ghana, with an annualized year to date return of 28.33%.
The Asset under Management(AUM) grew by over 79% from GHc76.39 million at the end of December 2016 to GHc136.78million by the end of December 2017.
The number of shareholders also increased significantly by over 30% from 14,774 to 19,134 by the end of the year.
The fund posted a notable year to date return of 41.52% .
The fund witnessed an upward price trend over the year 2017, with a steeper price appreciation observed within the first three quarters of the year and a flattening out within the last quarter. The fund began the year with the price of GHc 0.4152 and ended the year at GHc0.5876 per share, representing the year low and year high for the fund, respectively.
The Asset under Management (AUM) grew from GHC1.65million at the end of 2016 to GHC6.93 million at the end of 2017, showing an impressive growth of over 320%. This was mainly attributable to the performance of the fund and the boost in net deposits during the year.