• Fri. Aug 5th, 2022

Moody ratings: Attacking credit rating agencies unnecessary; cut wasteful expenses – Bokpin to gov’t

Prof. Godfred Bokpin, an economics lecturer at the University of Ghana Business School, has condemned the government’s attack on several credit rating firms in response to their devastating ratings of Ghana’s economy as misguided.

In a statement, Ghana’s Finance Ministry accused Moody’s of ignoring essential material in downgrading the country from B3 to Caa1 with a stable outlook.

President Nana Addo Dankwa Akufo-Addo has also lamented the impact of such ratings on African countries’ costs and access to finance markets.

Despite their flaws, Prof. Bokpin believes the rating agencies are close to the truth.

As a result, he is encouraging the government to take steps to turn things around by cutting further spending.

“I’m not seeing many responses from the administration.” I believe that the government should instead focus on the country’s core imbalances and financially unsustainable challenges. Aside from that, we’ll be focusing on the minors.”

“Looking at the government’s own drive to pass the E-levy at all costs reveals a level of desperation.” Even without the help of the credit rating report, we can tell that something is wrong with the economy. The wisest course of action for the government is to reduce needless spending.”

Fitch lowered Ghana’s economy from B to B- with a negative outlook in January 2022.

Ghana’s economy was also downgraded by Moody’s from B3 to Caa1 with a stable outlook, down from B3 with a negative outlook.

According to them, the new ratings reflect Ghana’s difficulties in resolving its liquidity and debt problems.

Ghana, for example, is relying on domestic revenue mobilization to get by due to a lack of access to the international financial market.

Amid widespread popular opposition to the E-levy, some commentators have suggested that seeking an IMF bailout would be a preferable option, but the administration has stated on multiple platforms that it does not wish to seek assistance from the IMF.

The government is perplexed, and it has filed an appeal.

The government had previously opposed Moody’s decision to cut Ghana’s credit rating.

In a statement, the Finance Ministry expressed surprise at Moody’s rating of the country.

“Given Ghana’s status as a model of democracy in Africa, we find it difficult to understand Moody’s assessment of the deterioration of Ghana’s institutional strength.”

“The government of Ghana is therefore completely perplexed by the decision to downgrade Ghana’s credit rating to Caa1 despite a series of progressive engagements we had with the Moody’s team, the quality of data supplied, and the government’s medium-term economic and fiscal focus, 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 said.

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