The President of the Ghana Union of Traders Association (GUTA), Dr. Joseph Obeng, has taken a swipe at the Bank of Ghana, following its announcement on the increment of the Monetary Policy Rate by 150 basis points to 29.5 percent.
He further slammed the BoG for its excessive increase in the rate arguing that it has the propensity to put unnecessary pressure on businesses as lending rates are likely to go up.
Governor of the Central Bank, Dr. Ernest Addison explained that the increase “will be critical in resetting the economy on the path of recovery and sustaining growth. Headline inflation has declined marginally for two consecutive times but continues to remain relatively high compared to the medium-term target of 8+ or -2%. To place the economy firmly on the part of stability, it is important that the Bank of Ghana increases the Monetary Policy rate.”
But speaking on Citi Breakfast Show with Bernard Avle, the President of GUTA said the BoG used wrong method in increasing the policy rate.
“The cost of doing business is extremely high, and we are not competitive in the sub-region. Yesterday March 27, the Monetary Policy Rate was increased, meaning that interest rate will go up,” he said.
He added, “the accumulation of inflation that we are suffering is cost-push inflation. It’s not a demand pull that we have excess liquidity of cash, where is the cash? The effect of the exchange rate and taxes that we have paid have accumulated in cost has triggered the inflation we are experiencing. If you want to find a solution, you don’t increase Monetary Policy to increase the cost of borrowing to compound the inflationary problems we have. It means that you are using the wrong method”.
He called on the government to cut down on expenditure to ease the burden on Ghanaians.
“Government should prune down on expenditure,” he opined.
GUTA which is not enthused with plans by the government to introduce three new taxes and is calling Parliament not to pass the taxes.
According to GUTA, such taxes are obnoxious and will bring more burden on the business community which is already in distress.
GUTA issued the statement on the back of reports of three new taxes currently before Parliament for consideration to help government shore up more revenue to salvage the ailing economy.
The three new taxes are Income Tax (Amendment) Bill, Excise Duty and Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill.
