Mr. Alan John Kwadwo Kyerematen, a leading contender for the New Patriotic Party’s (NPP) flagbearer race, has faulted the Bank of Ghana’s (BoG) inflation targeting policy, saying it is major contributor to the high cost of doing business in the country.

He has therefore advised the BoG to cut the prime rate to a single digit, which will make capital cheaper for industry.

The prime rate is the rate at which the Bank of Ghana (BoG) may lend to the regulated commercial banks overnight, often to meet their reserve requirements. The bank also uses the prime rate to communicate its stance on inflation.

At its meeting held recently in Accra, the Monetary Policy Committee of the Bank of Ghana raised its prime interest rate by 100 points to 19.0% to contain inflationary pressure.

Mr. Kyerematen explained that increasing the prime rate to contain inflationary pressures is a defeatist approach because it makes the cost of borrowing expensive, especially for industry.

According to him, the high cost of borrowing translates into high prices of goods and service, and the result is spiralling inflation.

This, he said, defeats the purpose of hiking the prime rate to contain inflationary pressure.

Mr. Kyerematen said the Central Bank can influence market lending rates through the prime rate by reducing its prime rate to a single digit and ensure that commercial banks also reduce their lending rates.

He said his vision is to build a prosperous, modern, industrialised and stable country with a well-educated and healthy population with equal access to opportunities regardless of political, religious and tribal affiliations.

He blamed the country’s economic challenges on corruption, ballooning debts, spiralling inflation, high interest rates and the free fall of the cedi.

Mr. Kyerematen called for a diversification of the economy and increased exports to earn additional foreign exchange.

In addition, he proposed encouraging foreign direct capital flow into Ghana, as well as remittances to curtail the free fall of the cedi.

He said his proposal to ensure that all executives of the NPP, from national to polling station, are put on a monthly salary so they can focus on working for the NPP fulltime was doable.