|
Prime Rate now stands at 18.5%
Audrey Micah,Ghanadot
Accra, Feb 25, Ghanadot - The
Monetary Policy Committee (MPC) of the Bank of Ghana has
announced 18.5% as the new prime rate, representing a 1.5%
increase. This is in a bid to stem
inflation and reduce exchange rates expectation.
Dr. Paul Acquah, Chairman of the Committee, said a rise in
the rate was necessary to deal with price inflation and to
take off some heat in order to
put it on the path to stability.
The strong
demand for goods and services which has impacted negatively
on the rate of inflation also
informed the decision by the MPC to increase the prime rate.
He said the rate would gradually be reduced in line with
future forecast of inflation.
Inflation is expected to peak early in the
second quarter before returning to the range of 10-13
percent by the end of the year.
According to Dr. Acquah, tight
monetary policy was necessary to deal with the huge fiscal
and external accounts deficits.
On revenue and expenditure, the chairman of the committee
said, The tightening of the monetary policy
was in line with government’s
policy to reduce expenditure.
"It should also provide support to the
prospective tightening of fiscal policy in the budget for
2009".
He maintained that while total revenue and grants amounted
to GH¢5.6 billion, total expenditure on the other hand stood
at GH¢8.0 billion.
This, according to him,
resulted in a budget deficit of GH¢2.5 billion, which is
about 14.9 percent of GDP last year.
While some business men welcomed the directives from the
committee, others thought it
was not in their favour as they wouldl
no longer be able to do business effectively.
Ghanadot
|
