President Mills appeals to banks to reduce interest rates

Accra, July 20, GNA - President John Evans Atta Mills on Tuesday, appealed to managements of the nation's banks to reduce the current high interest rates.

He said now that the economy was improving, with a further decline in the Bank of Ghana base rate, the banking sector could be of more help to local industries with a reduction of the interest rates to sustain industries and help them to grow.

The Central Bank, last week announced a reduction in the base rate from 15 per cent to 13.5 per cent.

President Mills made the appeal when Mr Charles Cofie, President of Ghana Employers Association (GEA), led a delegation to call on him at the Osu Castle, in Accra.

They submitted some proposals that would enhance the nation's industrial operations to government.

President Mills lauded the role of the industrial sector in national development, and assured stakeholders that government would endeavour to eliminate problems confronting the nation's industrial growth, within the national agenda of building a Better Ghana.

He commended the private sector's contribution to the economy, through job creation and the wherewithal for workers, to take care of themselves and their dependants.

President Mills said government would ensure a proper mix of both local and foreign investors, without the foreign investor having undue advantage over their local counterparts.

Government would also maintain a congenial business atmosphere, and consequently review the recent increase in utility tariffs because the issues raised about it concerned everyone.

President Mills stressed government's determination to maintain the peace, stability and security of the nation to attract both local and foreign investment and make Ghana a preferred investment destination.

He called for more of such interactions in the interest of the development of the nation's industrial growth and development.

Mr Cofie said the association, formed in 1959, was one of the largest private sector groups.

He commended government for its intervention in requesting the Public Utilities Regulatory Commission (PURC) to review its position on the current utility tariff increases, and hold further consultation with stakeholders.

Mr Cofie painted a sad picture of effects of the tariff increase on industry and announced that a member of the association owning a company that produced iron rods, had decided to close its operations "since the tariff adjustment upwards means it must pass on a 20 per cent price increase to cover costs."

"The company cannot compete at this level against imported iron rods and this would result in a loss of 500 jobs," Mr Cofie said.

Assuring government's collaboration for the nation's industrial development, Mr Cofie recommended the re-instatement of the tariff adjustment mechanism that had been suspended for the last three years.

The mechanism, he said, would ensure regular increment on gradual basis instead of leaving a long gap and suddenly imposing high utility rates on consumers.

"The PURC should consider adopting the GEA's recommendation of two step increase in January 2011 and thereafter apply the tariff mechanism," he added.

Mr Cofie called for higher national productivity and sustained economic growth as well as the removal of duties on all raw and packaging materials that were imported into the country.

He called for protection of the local investor to compete favourably and the need for lower bank interest rates.

"Ghana's special endowment as a place of peace, security and safety among African nations, should be packaged and positioned as the "safest investment destination".