More opposition to financial services VAT

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• KWAME KWAME 9 years ago

  The action of the Central Bank of Ghana makes one believe that Governor of Bank of Ghana is not independent. The independence of the Central Bank of a country is vital so that they can institute better monetary policies irres ...
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  The action of the Central Bank of Ghana makes one believe that Governor of Bank of Ghana is not independent. The independence of the Central Bank of a country is vital so that they can institute better monetary policies irrespective of the Government in power. In fact, the Governor of the Central Bank should be nominated by the President but vetted by Parliament. He/she should be given say 5 year contract, renewable for another 5 years for a total of 10 years. The contract would be renewed by parliament instead of the President based on his or her prior performance. With this type of arrangement, there will be job security for the Governor even when there is a change of government. The Governor in this respect becomes non-partisan and independent. If this is not the current arrangement, then Parliament should make the necessary legislative changes to give more power to our Central Bank Governors who would be chosen on merit. This is the only way tits work with other sectors of the economy especially the Ministry of Finance and the private banks operating in the country.

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• KWAME KWAME 9 years ago

  The huge issuance of treasury bills and bonds by the Bank of Ghana is seriously CROWDING OUT the private sector of the economy of Ghana, that is, there is lack of access to finance for the businesses in the country especially ...
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  The huge issuance of treasury bills and bonds by the Bank of Ghana is seriously CROWDING OUT the private sector of the economy of Ghana, that is, there is lack of access to finance for the businesses in the country especially for the small and medium enterprises (SMEs) THAT CAN TRANSFORM THE ECONMY. But we all know that private sector is the engine of growth for any nation. If we crowd out the private sector, how can our nation develop? Currently these treasury bills and bonds are yielding or paying interest of between 20 -28% APR. If I am a commercial bank operating in Ghana, why will I lend money to any private company that are normally considered risky investment at say 20% return, if I can invest in risk-free Government Treasury bills paying me the say or more than 20% returns? THREE changes are required: First, the amount of treasury assets issued to finance Government expenditures should be drastically reduced. That is, there is need to tighten the monetary policy.
  Second, The amount of treasury assets commercial banks can keep on their balance sheets needs to be drastically reduced by the Central Bank.
  Third, the interbank interest rate that is charged when banks borrow/lend among themselves has to also be reduced drastically.
  With this three simple reforms, the commercial banks will have no other options but to start to look at more potential investments from the private sector (SMEs) in order to keep their operations as going concerns and profitable. This will help channel more need financing to our private businesses, industries etc. As we grow the private sector, the tax base will be increased and through enhanced fiscal policy, the Government will grow its revenue for its expenditures in a rather more sustainable manner. This is why it is is very important that the Governor of the Bank of Ghana MUST BE INDEPENDENT. She/he can then institute these not so popular but robust policies for the benefit of the tax payer or all Ghanaians and not for just the party in power.

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