The President, Nana Addo Dankwa Akufo-Addo, says recent ratings by International Rating Agencies are affecting the cost and access to capital markets by African countries.
He is therefore urging African countries to find a way to shield themselves from suffering the repercussions of rating agencies.
Presenting a report in his capacity as AU Champion for Financial Institutions, President Akufo-Addo said the funding challenges of African countries have been made worse due to the work of rating agencies and further affected by the COVID-19 pandemic.
“We need to guard against the continuing consequential strangle of the rating agencies which is the effect of the cost of access to the capital market for African countries and has during this COVID period resulted in the downgrading of many African countries, exacerbating, even more, the funding challenges,” he said.
Ghana, like many African countries, has had its economies downgraded in many international ratings, casting a dim view on the strength of its economy.
These signals discourage investments in these countries, hence limiting their access to international financial markets.
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.
The government is vigorously attempting to push through the 1.75% electronic financial transaction levy (E-levy) that it says will rake in about $1 billion annually.
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.