A lecturer of economics at the University of Ghana Business School, Prof. Godfred Bokpin, has described as misplaced, the government’s attack on some credit rating organizations following their damning ratings of Ghana’s economy.
The Finance Ministry in a statement accused Moody’s of omitting key information in its recent downgrade of Ghana from B3 to Caa1 with a stable outlook.
President Nana Addo Dankwa Akufo-Addo has also bemoaned the impact of such ratings on cost and access to capital markets by African countries.
But Prof. Bokpin believes the rating agencies are not far from the truth despite any shortcomings.
He is thus urging the government to take steps to turn things around by making some more expenditure cuts.
“I do not see a lot of reactions from the government. I think that government should rather focus on the fundamental imbalances and the fiscal unsustainable issues that the country is saddled with. Other than that, we will be majoring in the minors.”
“If you look at the government’s own drive to pass the E-levy at all cost, it tells you about a certain level of desperation. There is enough that we can get from the economy that all is not well, even without the help of the credit rating report. The best reaction from the government is rather to cut wasteful expenditure.”
Fitch, in January 2022 downgraded Ghana’s economy from B to B- with a negative outlook.
Moody’s also downgraded Ghana’s economy from B3 with a negative outlook to Caa1 with a stable outlook.
The new ratings, they say, reflect Ghana’s challenges in fixing its liquidity and debt challenges.
With limited access to the international financial market, Ghana, for instance, is turning to domestic revenue mobilization to rescue the situation.
Some analysts have proposed seeking an IMF bailout as a better alternative amidst wide public disapproval for the E-levy, but the government has indicated on different platforms that it does not want to seek assistance from the IMF.
Government puzzled, appeals ratings
The government earlier rejected Moody’s downgrade of Ghana’s credit rating.
The Finance Ministry in a statement said it is puzzled by Moody’s rating of the country.
“We are at odds to understand Moody’s assertion of the deterioration of Ghana’s institutional strength, given Ghana’s reputation as a beacon of democracy in Africa.”
“The government of Ghana is therefore completely puzzled by the decision to downgrade Ghana’s credit rating to Caa1, despite the series of progressive engagements we had with the team from Moody’s, the quality of data supplied, as well as the medium-term economic and fiscal focus of the government, underpinned by key fiscal consolidation reforms such as the policy decision to cut expenditure by 20%, as recently announced by the Minister of Finance,” the government added in the statement.