Professor of Economics at the University of Ghana Business School, Professor Godfred Bokpin has called the government’s attack on some credit rating agencies over their damning ratings on Ghana’s economy misplaced. .
The Ministry of Finance, 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 also lamented the impact of such ratings on the cost and access to capital markets by African countries.
But Professor Bokpin believes the ratings agencies are not far from the truth despite possible shortcomings.
He therefore urges the government to take steps to turn the tide with further spending cuts.
“I don’t see a lot of reactions from the government. I think the government should instead focus on the fundamental imbalances and unsustainable fiscal problems that the country is grappling with. Apart from that, we will specialize on minors.
“If you look at the government’s willingness to adopt the electronic tax at all costs, it tells you a certain level of desperation. There are enough things we can get from the economy that all is not well even without the help of the credit score report. The best response the government can make is instead to cut unnecessary spending.
Fitchin 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 addressing its liquidity and debt issues.
With limited access to the international financial market, Ghana, for example, is turning to domestic revenue mobilization to save the day.
Some analysts have proposed seeking an IMF bailout as a better alternative amid widespread public disapproval for the electronic levy, but the government has indicated on various platforms that it does not want to seek IMF assistance.
Perplexed government, appeal ratings
The government has previously rejected Moody’s downgrade of Ghana’s credit rating.
The Ministry of Finance, in a statement, said it was intrigued by the country’s rating by Moody’s.
“We disagree to understand Moody’s assertion of Ghana’s deteriorating institutional strength, given Ghana’s reputation as a beacon of democracy in Africa.”
“The Government of Ghana is therefore completely perplexed by the decision to downgrade Ghana’s credit rating to Caa1, despite the series of progressive engagements we have had with the Moody’s team, the quality of the data provided, as well as the government’s medium-term economic and fiscal environment, supported by key fiscal consolidation reforms such as the political decision to cut spending by 20%, as recently announced by the Minister of Finance,” added the government in the statement.