Interest rates will go down if… – Asare Akuffo
The President of the Private Enterprise Foundation (PEF), Mr Asare Akuffo, has predicted that a further reduction in interest rates is imminent if the government maintains the tempo and trend of economic stability.
He said the current stability was commendable and, therefore, called on the government to stay focused and maintain the trend to see some more easing in the interest rates.
Mr Akuffo, who is also the Managing Director of HFC Bank, was speaking at the annual general meeting of the largest private sector umbrella body.
“The current stability is commendable and if the government can maintain it. I don’t see how banks can keep interest rates above 20 per cent for a long time,” he quizzed, adding that the government should avoid anything that could cause the Central Bank to increase its policy rate.
The PEF president, however, identified some threats to the stability as the Single Spine Pay Policy, many analysts have predicted could swell fiscal deficit and end the months of sustained stability.
He urged the government to handle the policy with care.
There are other threats in the economy. The petroleum management fund managed by the National Petroleum Authority (NPA) is making under-recovery subsidies on petroleum products which the government should have the boldness to stop.
Other sectors of the economy are also heavily subsidised. These include the utilities which the government subsidies with several millions every month that affects the execution of some outlined projects to lay a good infrastructure for the country.
Making further observations on the economy, Mr Akuffo said the private sector growth had been appreciable since reforms in the 1980s, but the still have some challenges that need to be addressed to make it work better.
“These include addressing infrastructure problems that add to the cost of doing business, ineffective business associations, dishonouring of contracts and agreements; negative attitudes towards time, an ineffective public sector and above all the recurrent macroeconomic instability,” the PEF President stated.
He said infrastructure problems continued to hamper the efficient development of the private sector and called on the government to confront those issues head-on as well as establish a vibrant and reliable public sector that would be rid of corruption.
Mr Akuffo also called for the re-institution of regular meetings with the presidency as the case was in the 1990s to early 2000, so that the private sector could work closely with the government in addressing challenges hampering their smooth growth.
On the 2011 budget, PEF was happy that the government upheld some of its proposals such as a slash in the ad valorem excise duty rate, although small, the government’s plan to clear arrears to private sector actors, mainly contractors as well as the announced support for poultry farmers to procure equipment.
However, PEF wants the government to go beyond the grant for equipment for poultry fanners to guarantee them a market and check dumping, while splitting the Export Development and Investment Fund (EDIF) from the National Agriculture Fund to make them efficient and adequate for their respective roles.
“PEF will therefore stand by the government to take the bold and sometimes unpopular decisions to create an acceptable environment for small, medium and large scale businesses,” Mr Akuffo stated.
Meanwhile, PEF has launched a new three-year strategic plan to restructure its secretariat and operations, with the new scheme having a lean secretariat, while relying on external consultants and people in academia for its advocacy work.
PEF is a private sector advocacy body which was put together by six private sector associations to champion the course of the sector. The member associations include the Association of Ghana Industries (AGI), the Ghana Association of Bankers and the Ghana Chamber of Mines.
The rest are the Federation of Associations of Ghanaian Exporters (FAGE), the Ghana Employers Association (GEA) and the Ghana National Chamber of Commerce and Industry (GNCCI).
Source: Daily Graphic