A former Minister of Lands and Natural Resources, Mike Hammah, has been sharing his thoughts on how to bring down interest rates in the country.

According to Mr. Hammah, his intention is to provoke a national debate on the issue since it is of grave concern to the business community and the nation as a whole.

Mr. Hammah believes that, in this regard, the first thing is to tackle inflation and bring it down considerably because inflation is the greatest enemy to the sustenance of macroeconomic stability.

“Inflation causes interest rates to go up, and hence the cost of capital -- and this discourages private savings and encourages capital flight. It causes agitation for more wages. Our inflation is food- indexed; hence if we are able to produce enough food, then we can reduce it.”

Additionally, Mr. Hammah believes that there must be a concerted effort to cut down on waste and inefficiencies within the system by ensuring that Government prevents unproductive money finding its way into the economy through corruption and rent-seeking.

“Increase in broad money supply must be tied to value added output expansion of the economy,” he emphasised.

To end corruption, the former Minister has proposed the establishment of an end-to-end procurement platform for the procurement of goods, works, and services -- mindful of the fact that Government still remains the biggest spender.

“Government has to reduce the budget deficit by raking in more revenue, reducing expenditure and borrowing from the money market. They must also come out with policies that will increase exports to improve our balance of payment position and increase international reserves.”

He also called for strengthening credit bureau agencies so that the default risks of commercial banks can be reduced. He urged commercial banks to reduce their administrative and overhead charges by operating more efficiently.

Commercial banks must also strengthen their monitoring and evaluation units to efficiently monitor the implementation of projects for which loans have been advanced to the investing public.

“Officers of banks should also be advised to avoid kickbacks from loans that are given out to customers, for the realisation of the projects’ full benefit.

This is to reduce the spread between the prime rates set by the bank of Ghana and lending rates set by the commercial banks.”

Finally, he advised the investing public to help the banks reduce their non-performing assets by paying back their loans as and when they fall due.