Ken Ofori-Atta
Government of Ghana says it is finding it very difficult to accept Moody’s downgrade of Ghana’s credit rating.
The government has therefore rejected Moody’s downgrade of the country’s credit rating.
Moody’s downgraded Ghana’s long-term issuer and senior unsecured debt ratings to Caa1 from B3, and changed the outlook to stable from negative.
It said the new rating reflects the woes of Ghana in fixing its liquidity and debt challenges.
Moody further attributed the rating to the country’s ineffective revenue generation.
According to Moody, “The downgrade to Caa1 reflects the increasingly difficult task the government faces addressing its intertwined liquidity and debt challenges. Weak revenue generation constrains government’s budget flexibility, and tight funding conditions on international markets have forced the government to rely on costly debt with shorter maturity.”
However, the Finance Ministry in a statement issued Sunday February 6, 2022 said it is puzzled by Moody’s rating of the country, albeit the recent fiscal consolidation measures announced by the government.
“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,” government added in the statement.
The Finance Ministry said Moody failed to agree to its appeal and went ahead with its rating.
“Unfortunately, Moody’s rejected our appeal and went ahead with the downgrade despite all the concerns raised, which we believe were not factored into their decision.”
The Finance Ministry has raised concerns with Lucie Vila, the leader of Moody’s team that downgraded the country’s credit rating.
According to the Ministry, Lucie Villa did not properly understand Ghana’s credit story.
“Prior to the announcement, between 28th January to 3rd February 2022, Moody’s virtually engaged senior government officials of the Ministry of Finance and the Bank of Ghana on various issues. The Moody’s team was led by Lucie Villa (Lead Analyst on Ghana at Moody’s) and supervised by Matt Robinson. It is worthy to note that Lucie Villa only recently (beginning of January 2022) took over as the primary analyst covering Ghana for Moody’s. We are very concerned that Ms.
Villa may not properly understand and evaluate Ghana’s deepening credit story since obtaining our first credit rating back in 2003. She also has not visited the country since assuming the role and as such this downgrade at this critical time was based entirely on a desktop exercise, virtual discussions and what we believe to be the omission of critical data provided.”
Regardless of the government’s hurdles in overturning Moody’s rating, the Finance Ministry says government will continue to pursue ongoing efforts at revitalizing the economy amidst the COVID-19 pandemic.
It also says government remains absolutely confident in “our resolve to overcome the current chalenges with fiscal discipline and growth, in line with the president’s vision to build a strong, resilient and prosperous economy and a Ghana Beyond Aid.”
By Vincent Kubi