Development Economist, Dr. Daniel Amarteye Anim has bemoaned the increment in the Policy Rate by the Bank of Ghana warning it could cripple startup businesses across the country.
This follows the decision by the Central Bank to increase Monetary Policy Rate by 250 basis points to 24.5%, the highest since 2017.
According to the Bank of Ghana, the increase is due to the problems associated with the country’s rising inflation which stands at 33.9%.
Speaking to Starr News, Dr. Daniel Amarteye Anim who’s also the Executive Director of the Policy Initiative for Economic Development said startup businesses will be denied capital to expand production.
“Certainly what it means is that the cost of borrowing, the cost of capital will increase and as capital increases, startups or young businesses will not be in a better position. Because it will not make economic sense for you to go and borrow at a very high rate when money that comes to the business will not be able to pay for that particular facility. So, a lot of people will be denied capital and as they are denied, they will not be in a better position to expand production.”
He added: “As production declines, jobs will not be created, it will even affect revenue and government will not get its share of revenue in terms of taxation. So these are the implications of this particular policy in terms of consistently increasing policy rate and its implication on businesses. I believe that it is not the way to go and that we should find a better approach to ensuring that we minimize the cost of living in the country in terms of increases in the price of goods and services.”