The Ministry of Finance has expressed its disappointment with S&P Global’s recent downgrade of Ghana’s credit rating from B to B-negative.
The international ratings agency announced the downgrade but affirmed Ghana’s short-term ratings at B with a stable outlook.
But reacting to this, the Finance Ministry described the downgrading of Ghana’s rating as unfortunate. The ministry wondered why the rating agency would take such a decision at a time when many countries are reeling from the impact of the COVID-19.
A statement from the public affairs department of the ministry said: “It is very unfortunate that rating agencies will choose to downgrade our countries in these unprecedented times.”
Kicked while down
The ministry said the lowering of Ghana’s long-term foreign and local currency sovereign credit ratings had been caused by an increase in public expenditure.
This, the ministry said, has been necessary to lessen the impact of the coronavirus on Ghanaians and the economy.
It, therefore, called on S&P Global to freeze revising ratings in future when the world is facing a pandemic.
“As the South African Revenue Services Commissioner recently argued: ‘While we understand the underlying factors that are pointed out by the rating agencies, we think that during such a time of crisis, when the whole world is recalibrating and redefining its economic status, for any downgrades to be issued during this time is like kicking us when we are down.’
“We therefore call on rating agencies to seriously consider freezing any rating actions during global pandemics such as the COVID-19,” the ministry said.
Life over ratings
The ministry explained that the government has overspent because it chose to save lives and livelihoods in the face of the pandemic.
As such, temporary fiscal and economic adjustments are needed to contain the situation.
The ministry noted, however, that the government’s interventions have set Ghana’s economy on the path to recovery.
“The government chose to save lives and, therefore, instituted temporary life-saving initiatives and interventions aimed at protecting the general population against the negative economic effects of the pandemic,” the ministry said. It mentioned interventions including subsidies on water and electricity to support vulnerable households during the lockdown.
“The government also provided credit for micro, small and medium enterprises (MSMEs) whose businesses were most impacted by the lockdown,” it said.
E A Alanore