The Ghana Union of Traders Association, GUTA, is appealing to government to get banks to reduce interest rates on loans given to businesses or defer interest payment due to the economic impact of the COVID-19 pandemic.
According to the Association, it is unreasonable for banks to still maintain high interest rate on loans in such difficult times for businesses.
In an interview with Citi Business News, President of GUTA, Doctor Joseph Obeng, said even though GUTA commends government for announcing a stimulus package to help businesses, the Association is of the view that using moral persuasion to appeal to banks to reduce interest rates or defer interest payments will not be feasible.
He said most of the banks are yet to respond to an appeal from the Minister of Finance with the exception of the Republic Bank, hence the need for government through the Bank of Ghana to ask all banks and creditors to compulsorily reduce their interest rate or defer their interest payment to offer some relief to GUTA members.
“Well, most of us are not actually turning over our capital. If we have borrowed money from them, we are not turning the capital. Our goods are locked, some of us even paid deposits to our suppliers to send the goods and because of the outbreak of the disease, the deposit that we paid for the supplies have been locked, and so where are we getting the money to pay our loan.? So, we want the payment of the loan to be deferred like the Republic bank has done,” he said.
In addition, GUTA is asking the Ghana Revenue Authority and other state institutions mandated to collect revenue on behalf of government to come out with arrangements that will not put undue pressure on traders in meeting their tax obligations.
The GUTA President warned that any attempt to put undue pressure on traders in this period will be counter – productive and slow growth.
“We are not in normal times. We are in the period of sacrificing. Sometimes, people should be able to look through this and then all of us can solve this problem, but this time is not the fault or negligence of the client, he said.
He has however pledged GUTA’s support for all government initiatives aimed at curtailing the spread of the COVID-19 pandemic.
Banks to readjust interest rates to reflect drop in policy rate
Some commercial banks operating in the country say they are yet to finalize processes to determine the level of readjustment of their interest rates to reflect the drop in the policy rate.
The Monetary Policy Committee of the Bank of Ghana earlier this month reduced the rate at which it lends to commercial banks by 1.5 percent; from 16 to 14.5 percent.
According to the Bank of Ghana, the 150-basis points reduction in the rate which had been kept unchanged at 16 percent for at least five consecutive times, was influenced by the global developments due to the coronavirus pandemic.
This is expected to lead to a drop-in lending rates by commercial banks.
Ghana’s confirmed cases
Currently, Ghana has recorded 204 COVID-19 cases with 5 deaths and 3 recoveries.
Nine new cases were confirmed in addition to the previous 195, in an April 2, 2020 update by the Ghana Health Service. All the cases were confirmed in the Greater Accra Region.
Out of the nine new cases, four had no travel history nor had come into contact with any of the previously confirmed COVID-19 patients.
This development raises major concerns of a possible spark of a community transfer.