Chief Executive Officer of Dalex Finance, Ken Thompson said government must cut its expenditure in order to reduce interest rates
Mr. Thompson was commenting on the latest Annual Percentage Rate (APR) report by the Bank of Ghana that revealed that the average interest on vehicle loans offered by commercial banks in Ghana reached 35 percent as at the end of February 2016.
According to him, government cutting expenditure will reduce its appetite for borrowing and this will force banks to lend to the private sector at a lower rate
He explained to Accra-based Citi FM, that the high interest rate offered by banks makes it risky to lend to the private sector.
Europe has negative interest rates and it forces banks to lend to the real sector. I believe that if government was to control its borrowing habits, the commercial banks would have no other option but to lend to the private sector at a low rate, he added.
Mr. Thompson also bemoaned the high lending rate for farmers who struggle to afford loans from financial institution.
He concluded by emphasizing on the need to lower lending rates for the agric sector.