Member of Parliament for Bolgatanga Central, Isaac Adongo, has called the recent positive rating of Ghana’s economy by the American rating agency, Moody’s, a choreographed fraud.
On Accra based Metro TV’s “Good Evening Ghana” political talk show, Hon. Adongo revealed how Moody’s ignored a whopping US$4.25billion debt that the Akufo-Addo government has hidden in plain sight.
According to him, the convenient oversight is due to the fact that the government had paid Moody’s for the rating in a bid to shore up Ghana’s credit worthiness that it wants to use to lure investors into buying a US$3billion Eurobond that it is issuing.
Indeed, according to Adongo, this latest rating that pegs Ghana’s bond rating at B3 with a positive outlook was not done by Moody’s out of its own volition, but under its Investor service which is a paid-for rating.
Even more damning, he reveals that Moody’s is a discredited agency, whose similar fraudulent rating, misled investors into investing in the US mortgage industry that caved in, in 2008.
He points out that for inflating ratings to misguide investors into the 2008 subprime mortgage crisis, Moody’s has been fined US$864million by the US government. It is paying US$460million to the US Justice Department and the other US$404million to 21 States of the US including, Washington.
“As we speak today, Moody’s is one of those institutions sanctioned for inflating ratings of mortgage companies in America that led to the 2008 financial crises – subprime and mortgage crises.
“Today Moodys’ has agreed to pay US$864million in penalties for misleading the investors,” Hon. Adongo noted, adding; “Moody’s is a discredited institution on which the government of Ghana is relying for credibility.”
On Moody’s assessment that the economy is on a sustainable path because the country has returned to primary balance – (meaning the country is able to pay for its interest costs on borrowing without having to borrow to pay these costs), Hon. Adongo points out that the conclusion is suspect.
“But that is not how you analyse the debt sustainability of a country; in fact you can have one of the best primary balance and yet be in debt distress. Because the variables that go into the basket of measuring the debt distress of a country which the IMF itself has declared that Ghana is at risk of debt distress, primary balance is a no go area, there are major fundamental issues,” Adongo charged.
On Moody’s claim that Ghana’s growth will be driven by the non-oil sector, Hon. Adongo said, that analysis meant nothing because Ghana’s non-oil sectors, including Agric, Industry and Service has been growing since 2017.
According to him, the best non-oil growth that Ghana has had was in 2016 at 5.1% growth and that the current government is now doing just about 4.6%.
“Moody’s says Ghana is investing infrastructure and that the infrastructural investment will also drive growth. But the highest infrastructural investment was in 2016 – Ghc7.7billion; 4.5% of GDP.
“Fast forward 2017 we did 6.3% of GDP, we still have not reached 2019 6.1% so we are not even at 2016 nominal values 1.8% of GDP,” Hon. Adongo said.