Former President John Dramani Mahama has
reacted to the downgrade of Ghana’s economy by S&P credit rating agency.
He says
there appears to be no end to the problems with the Ghanaian economy.
In a
Facebook post, Mr Mahama said the “steep depreciation of the Ghana Cedi in
recent days,” clearly shows that the mid year review of the 2022 budget failed
to win back the confidence of the investor community and the Ghanaian public.
“Unfortunately,
no credible remedial plans have been put forward by the government to salvage
the economy.
“A
national dialogue on the economy, bringing some of our best brains together
will serve us well, even as we prepare for debt restructuring and negotiation
of an IMF programme.”
S&P
decided to push Ghana’s debt further into speculative territory, lowering its
foreign and local currency sovereign ratings to CCC+/C from B-/B, on Friday
August 5.
It said
its outlook for the country is negative, “reflecting Ghana’s limited commercial
financing options, and constrained external and fiscal buffers.”
The
Covid-19 pandemic and the conflict in Russia have magnified Ghana’s fiscal and
external imbalances, S&P said.
Demand
for foreign currency has been driven higher by several factors, including
nonresident outflows from domestic government bond markets, dividend payments
to foreign investors and higher costs for refined petroleum products, the
agency said.
The
Government of Ghana has however said it is disappointed by S&P’s decision
to downgrade Ghana because bold policies have been implemented in 2022 to
address macro fiscal challenges and debt sustainability which have been
significantly exacerbated by the impact of these global external shocks on the
economy.
The
government said it will continue to be proactive in addressing the impact of
these external and domestic headwinds on the economy and on the lives and
livelihoods of Ghanaians.
The
Ministry of Finance said ” On 5th August 2022, Standard and Poor’s
(“S&P”) Global Ratings downgraded Ghana’s foreign and local currency credit
ratings from ‘B-/B’ To ‘CCC+/C’ with a negative outlook. According to S&P,
the downgrade is due to intensifying financing and external pressures on the
economy.
“In
arriving at their decision, the credit rating agency considered: (a) the
lingering effects of the COVID-19 pandemic and the severe global shock of the
Russian invasion of Ukraine on Ghana and the consequent fiscal and external
imbalances; (b) elevated gross financing needs in the face of International Capital
Market hiatus (c) the limited commercial financing options; and (d) the
credible steps taken by Government to fast-track fiscal consolidation and the
passage of key revenue bills.
“The
Government is disappointed by S&P’s decision to downgrade Ghana despite the
bold policies implemented in 2022 to address macro fiscal challenges and debt
sustainability which have been significantly exacerbated by the impact of these
global external shocks on the economy.
“Government
will continue to be proactive in addressing the impact of these external and
domestic headwinds on the economy and on the lives and livelihoods of
Ghanaians. Government has implemented key revenue and expenditure measures,
including the 30% cut in discretionary expenditures. The delays in the passage
of key revenue measures introduced in the 2022 Budget affected revenues
performance in the first half of the year. However, all the revenue measures
introduced in the 2022 Budget, including the review of the MDA Fees and Charges
Bill, the Tax Exemption Bill, the E-Levy Bill, have all now been promulgated by
Parliament. These fiscal measures are now in full implementation mode to
support our fiscal and debt sustainability policies.”
It added
“The Government is committed and is confident that it will successfully emerge
from these challenges in the shortest possible time as we have demonstrated the
track record to do so in the Akufo-Addo led Government. Our current engagement
with the International Monetary Fund for a
Programme, incorporating our Enhanced Domestic Program (EDP), is expected to
support our drive to restore and sustain macroeconomic stability; debt
sustainability and promote growth and job creation whilst ensuring social protection
to achieve our vision of a Ghana Beyond Aid.”
By 3news.com