Just when Ghanaians thought things will get better for the economy of Ghana, Global Credit Rating Agency, S&P has downgraded Ghana’s economy lowering the country’s foreign and local currency sovereign ratings to CCC+ from B-.
The current rating of CCC+ is the worst for since 2003.
In February 2022, while the other two Credit Rating Agencies downgraded Ghana, S&P rather affirmed Ghana’s rating at B- with a stable outlook. Now S&P has also downgraded the country leaving many to wonder how worse the rating of the others will be for Ghana.
The ‘Big Three’ Rating Agencies comprised of Moody’s, Fitch and S&P Global Ratings are likely to cause more problems for Ghana as the country is going through difficulties already as a result of their work on Ghana in February this year.
On Friday midnight, the S&P Global Ratings scored Ghana CCC+ and said the outlook for the country is negative.
The S&P report blamed the Covid-19 pandemic and the ongoing conflict between Russia and Ukraine as the major “magnifiers” of Ghana’s current fiscal and external imbalances, MyNewsGh.com confirmed.
The S&P said the dollar demand within the economy of Ghana has been exacerbated by dividend payment to foreign investors, nonresident outflows from the government’s domestic bonds market and importation of refined petroleum products.
Also, earlier downgrades of the country which affected its access to the Eurobond affected Ghana in a big way, S&P noted.
The nation has also been affected by a lack of access to Eurobond markets, the agency said.
Regarding taxes like E-Levy and the passage of the E-VAT, S&P believes the situation is still challenging and the government’s target were ambitious.
“While these changes could improve the tax take going forward, the situation remains challenging, and over the first half of 2022, the fiscal deficit has exceeded the government’s ambitious target,” S&P said.
Harsh and ‘racist’ rating
There have been concerns over whether Africa’s sovereigns are treated fairly by the global credit ratings market, which is dominated by the ‘Big Three’ of Moody’s, Fitch and S&P Global Ratings.
Moody’s downgraded Ghana’s long-term foreign currency sovereign rating from B3 to Caa1 (with a stable outlook) on February 4th 2022 and said Ghana faces an increasingly difficult task of addressing liquidity and debt challenges.
The Finance Ministry “challenged” Moody’s downgrade and questioned its methodology.
The Ministry said it was ‘gravely concerned’ that key data had been omitted in the decision, including “2022 budget expenditure control measures and 2022 upfront fiscal adjustments.”
The ministry also alleged the use of “inaccurate balance-of-payments statistics” and hit out at a process which it said was “based entirely on a desktop exercise (and) virtual discussions” without a visit to Ghana from Moody’s country analyst.
There has been renewed accusations that African economies are harshly treated by international credit ratings firms.
President Akufo-Addo spoke at the African Union against the Big Three.