Finance Ministry urges ratings agencies to freeze action amid COVID-19

The Ministry of Finance has called on the credit rating agencies to reconsider any rating action during global pandemics such as COVID-19.

This follows the downgrading of Ghana’s rating by S&P Global Ratings from B to B- although the agency also revised its outlook to stable.

Officials attribute the change largely to the impact of COVID-19 on Ghana’s fiscal strength as the national sovereign debt continues to grow, reaching more than 70% of gross domestic product in 2020.

In a statement, the Ministry of Finance said: “We, therefore, call on rating agencies to seriously consider freezing any rating actions during global pandemics such as COVID-19.

“It is very unfortunate that rating agencies will choose to downgrade our countries in these unprecedented times.”

Ghana Beyond Aid

Ghana spends 50% of her budget revenue on coupon payments. However, the revised outlook also presents an optimistic forecast by S&P of the country’s improvement potential.

S&P Global Ratings also noted significant positive developments in the areas of current account position, external reserve build-up and unparalleled stability in interest and exchange rates.

The Ministry of Finance added that, even compared to her peers, Ghana is in a good position to recover fully, given the measures taken to stabilise the economy.

“Going forward, we expect that with the gradual easing of restrictions, the economy will swiftly rebound and all the one-off expenditures eliminated. We have a clear path towards the restoration of economic stability in the short to medium term,” the ministry said.

“We will sustain our progress and accelerate this through the GHC100 billion Ghana CARES transformation programme within the general policy framework of Ghana Beyond Aid and certainly beyond the pandemic.”

COVID-19-induced downgrades

The Finance Ministry says the recent downgrading of the country’s credit ratings by Standard and Poor’s does not reflect how the economy has been managed.

It also said that the re-rating is not peculiar to Ghana, as Standard and Poor’s has taken turns to review how COVID-19 could affect the economies of other countries.

More than 80 countries have had their sovereign credit ratings lowered in the general review of credit ratings this year. There have been more than 100 revisions to a negative outlook.

The adverse rating actions have touched almost all continents as rating agencies react to the effects of the pandemic on the global economy.

* Asaase Radio 99.5 – tune in or log on to broadcasts online.
Follow us on Twitter: @asaaseradio995
#asaaseradio  #TVOL