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The average loan rate or cost of loans has fallen from 2.59% to 21.10% in the last year, as revealed by the Bank of Ghana in its January 2020 Economic and Financial Data Summary.
But between October 2020 and December 2020, the interest charged on the loans was reduced by 0.16%.
Although the cost of borrowing remains high compared to its peers on the African continent, it has dropped by approximately 10% since the administration of Dr. Ernest Addison took over the reins of the Bank of Ghana.
According to data from the Bank of Ghana, Ghana’s benchmark rate has fallen 1.34% in the last year, from 16.11% in December 2019 to 14.77% in December 2020.
However, the cost of credit varies between commercial banks, as they price their rate based on their risk analysis and also on the risk of customers.
Some banks offer loans as low as 17%, while others have rates as high as 28%.
When it comes to interest rates on Government of Ghana securities, rates have also fallen, but only marginally.
For example, the yield on 91-day Treasury bills fell 0.61% in December 2019 to 14.08% in December 2020.
Furthermore, interest on the 182-day T-Bill has fallen 1.02% in the last year to 14.13% in December 2020.
Fitch Solutions expects Ghana interest rates to ease
The research arm of the rating agency, Fitch, previously forecast a drop in interest rates in the country, starting early next year.
He linked it to a further drop in the country’s inflation rate next year, which will then remain in the single-digit range. It projects year-end inflation of 8.5% for 2021.
The senior country risk analyst for sub-Saharan Africa, William Attwell, told Joy Business that a new fall in inflation will cause a easing of monetary policy and interest rates.
“It is expected that monetary policy will relax during 2021 due to a new drop in inflation. We expect inflation to decline further next year and that will also facilitate that process. That’s really austere on the monetary front for Ghana. “
