22nd July 2024

Dr Ernest Addison, Bank of Ghana governor

The Bank of Ghana (BoG) has reduced its benchmark policy rate by 150 basis points, as its first response to the strain the Coronavirus disease (COVID-19) is imposing on Ghana’s economy.

It is expected that this will also lead to drop on the rates of commercial loans.

The bank reduced the rate, which is the benchmark for inter-bank lending, from 16 per cent to 14 per cent yesterday.

This was contained in a release signed by the Governor of Bank of Ghana and Chairman of the bank’s Monetary Policy Committee (MPC), Dr Ernest Addison.

The statement followed the conclusion of the 93rd MPC meeting, which reviewed activities in the economy and the impact of global developments on the local front.

The reduction in the rate is the first since November 2018, and is expected to combine with other factors to make cost of credit cheaper.

COVID-16 effect on growth

The central bank fears that the COVID-19 could collapse 2020 growth to five per cent or 2.5 per cent, in the worst case scenario.

The reduction in the rate could make funds cheaper for businesses to access and use to revitalize their operations.

“In the assessment of the Bank, the negative impact of COVID-19 on exports, imports, taxes, and foreign exchange receipts will culminate in a slowdown in economic activity. GDP growth is forecasted to decline to 5.0 per cent in a baseline scenario. In the worst case scenario, GDP growth estimates could be halved to about 2.5 per cent in 2020.

“These assessments are preliminary as the situation is very fluid and the degree of uncertainty concerning the outbreak is very high. This means that there is a likelihood that these assessments could change rapidly,” Dr Addison said.

MoMo charges down

Also, in a move to promote the use of digital money transfer platforms, the BoG announced that mobile money charges on transfers up to GHS100 is now free.

“All mobile money users can send up to GH₵100 for free (excluding cash out). This includes sending to a recipient on the same network, or another network via the interoperability platform,” the statement said.

The BoG also disclosed that daily thresholds for various mobile money wallets have also been increased. These will take effect from tomorrow, March 20 2020.

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