President Nana Akufo-Addo has urged African leaders to guard against the continued power of rating agencies over African economies.
Speaking at the African Union meeting in Ethiopia on Sunday February 6, he observed that the credit ratings of these rating agencies have affected the cost of borrowing and access to international capital markets.
His comment comes as ratings agencies Fitch and Moody’s have both downgraded Ghana’s borrowing capacity, a situation that is affecting the country’s finances.
“We need to guard against the consecutive and continued takeover by rating agencies, which has affected the cost of and access to capital markets for African countries, and has, during this Covid-19 period, resulted in the downgrading many African countries, further exacerbating their financing difficulties.
“Furthermore, it is of the utmost importance that G20 leaders stick to their commitment to reallocate to Africa the $100 billion of SDRs agreed at the Paris summit,” he said. .
On Friday, February 4, Moody’s Investors Service (Moody’s) downgraded Ghana’s long-term issuer and senior unsecured debt rating from B3 to Caa1 and changed the outlook to negative.
It also downgraded the senior unsecured MTN program ratings to (P)Caa1 from (P)B3 and the senior unsecured debt backed debt rating to B3 from B1.
“The downgrade to Caa1 reflects the increasingly difficult task facing the government in addressing its liquidity and debt challenges.”
“Weak revenue generation limits the government’s fiscal flexibility, and tight financing conditions in international markets have forced the government to rely on expensive shorter-maturity debt,” Moody’s noted.
At the same time, the Ministry of Finance appealed the downgrading of the country’s credit rating to Caa1 from B3 by the rating agency Moody’s.
In a statement, he said the Government of Ghana was completely bewildered by the decision to downgrade Ghana’s credit rating to Caa1, despite the series of progressive engagements it had with Moody’s team, the quality of the data provided, as well as the support – the government’s long-term economic and fiscal orientation, underpinned by key fiscal consolidation reforms such as the political decision to cut spending by 20%, as recently announced Finance Minister Ken Ofori-Atta.