Average lending rate inch up to 33.75% at end-December 2023
Average rates on loans given to individuals and businesses by banks in the country stand at 33.75% at end-December 2023.
This is 0.48% above the 33.27% average lending rate recorded at end-November 2023.
The marginal increase is on the account of increments in the Bank of Ghana’s policy rate which subsequently leads to an increase in the Ghana Reference Rate (GRR) and risk assessment charges on borrowers.
Despite the rise in average lending rate at end-December 2023, the average lending rate marks a 1.83% (183bps) year-on-year (YoY) decrease in interest rates when compared to the 35.58% average lending rate at end-December 2022.
The Ghana Reference Rate (GRR) per the BoG’s January 2024 Summary of Economic and Financial Data, is currently pegged at 32.16% as at end-December 2023.
The Bank of Ghana’s monetary policy rate currently stands at 30% following a 800bps (8%) increment in the prime rate by the apex bank.
The marginal rise in average lending rate means a marginal hike in the high cost of borrowing by individuals and particularly businesses which translates into high cost of doing business.
The high average lending rate also makes it difficult for businesses and individuals to pay back loans taken from banks thereby potentially increasing gross non-performing loan ratios of banks in the country.
