Business

BoG Reduced Ghana Reference Rate To 16.74% In May

The Bank of Ghana’s new Ghana Reference Rate for May 2018 is 16.74 percent.

The rate is the reference by which commercial banks will set their interests on loans granted to customers at least for this month.

The figure is lower compared to that quoted for April which stood at 16.82 percent.

Introduced in April this year, the Ghana reference rate is a new mechanism to help in the calculation of interest rates on loans issued by commercial banks.

The new figure of 16.74 percent, is a 0.8 percent drop from the 16.82 percent posted for April.

In percentage terms, the figure dropped marginally by 0.47 percent between the one month period.

Per the new reference rate system, the interest that a customer will be expected to pay on credit he or she takes from his or her bank, compared to other clients, could either be higher or lower.

This is because the bank will adjust its rate by either adding or subtracting the client in question’s risk premium to the reference rate.

The Bank of Ghana is hopeful that the new rate will help address the challenges associated with the high interest rates which have resulted in rising Non Performing Loans (NPLs) among commercial banks.

In an earlier interview with Citi Business News, the CEO of the Private Enterprise Federation, Nana Osei Bonsu said he is hopeful that businesses should enjoy some respite soon.

“That will definitely have an impact on the interest rate that the banks charge for the private sector…In the long term, we believe that the cost of doing business will be low,” he stated.