Dr. Cassiel Ato Forson, the Minister of Finance-designate, appeared before Parliament today, where he outlined his strategy to address Ghana’s high interest rates and ensure effective microeconomic policies for the private sector.
Responding to questions from the Appointment Committee on what he aims to do differently to ensure micro economic policies are more effective in lowering interest rate for the private sector, he stressed the pivotal role of fiscal authorities in stabilising the economy.
He pointed out that the government’s frequent borrowing activities significantly contribute to rising interest rates.
“If the country is actively in the market borrowing every week—rolling over GHS 111 billion weekly—the interest rate will certainly go up,” he said.
Dr. Ato Forson further stated that interest rates are often tied to inflation, emphasising the need for immediate action to stabilise key economic issues.
He outlined approaches that could help address the issue, including cutting wasteful expenditures and adopting prudent borrowing practices.
“We need to work in a way we can stabilise inflation, stabilise the exchange rate, and create jobs. Until we such a thing, certainly the concerns you raised will be there and there’s a lot of work we have to do.
“It starts from the fiscal authorities, and we have to cut expenditure and cut thebwaste to avoid excessive borrowing,” he stated.
He argued that reducing the government’s borrowing appetite would ease pressure on the private sector, enabling businesses to access credit at lower rates.
“If you cut the waste, you’ll certainly go to the market in a careful way that you’ll not be borrowing as much as you do today.
“That in itself you won’t crowd down the public sector and you will be bringing down inflation in a way that interest rate will come down, ” he said.
