Government borrowing on the local market last year hit the one trillion cedis mark. The heavy borrowing thus compelled private sector to pay high interest rates as bank could afford to operate without a conscious attempt to attract business. Sources at the two multilateral agencies World Bank and IMF have revealed to The Independent.
But for the high patronage by the government for funds of the local banks, interest rates would have come down as the banking sector sought business outside the public sector, the sources further said.
The Ghanaian economy currently has some of the highest lending rates on the African continent, which has stifled domestic growth. The lending rates are at present from 45-51% taking into consideration, the bank in question and the sector in which it operates
The size of the government debt has renewed calls for a cut in expenditure or an increase in the revenue base. The latter attentive has been undertaken yet, the economy has not shown signs of rebounding. In the first half of this year for example, the Internal Revenue Service (IRS), collected more than half of its target of 1.2 trillion cedis. In the meantime, interest on government borrowing is also quite high at around 7% of GDP currently.
