Time to Reform the Ghana Reference Rate: From treasury bill yields to banks’ deposit costs
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The Ghana Reference Rate acts as a baseline for the price of credit for businesses. These businesses use loans for payroll, restocking shops, or buying equipment. The utility of this rate depends on its ability to reflect current financing conditions. Borrowers must also be able to understand how the formula determines the interest rates they pay.
For businesses borrowing to buy equipment, restock a shop or meet payroll, the price of credit affects everyday decisions. The Ghana Reference Rate (GRR) provides a common starting point for that price. Its usefulness depends on whether the formula reflects financing conditions and whether borrowers can understand how it becomes the interest rate they pay.