Ghana’s is staring at a serious economic mess as its creditworthiness gets recently reduced significantly by the agency Standard and Poors’ (S&P), which dropped the country’s credit ratings to B Negative, one of the lowest so far.
Ghana’s current rating is regarded as vulnerable and as such foreign investors will regard the potential of them gaining any better returns on their investments as significantly speculative.
“The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties that could lead to the obligor’s inadequate capacity to meet its financial commitments,” stated standards S&P in explaining the B rating status of Ghana.
This means that concessionary loans planned by the Akufo Addo administration will have higher interest rates and more stringent requirements. Also, investors will have second thoughts about investing in Ghana.
The Finance Ministry is accusing the S&P of insensitivity, claiming the rating agency should not have downgraded Ghana’s credit outlook in the midst of the COVID-19 pandemic.
“It is very unfortunate that rating agencies will choose to downgrade our countries in these unprecedented times,” said the Finance Ministry in a statement released on Monday, September 14, 2020.
Incidentally, the Akufo Addo administration is demonstrating an insatiable appetite for more loans despite its bad credit position. One of the latest questionable attempts at securing foreign funds is through the questionable Agyapa Royalties deal.
The deal intends to provide Ghana some US$ 500 loans routed through a notorious tax haven in Jersey on the British Channel Islands, in what has created a massive outrage in Ghana and has earned the President and his lieutenants the derogatory tag as “Akyem Sakawa Boys”.
Policy think-tank, ASEPA had earlier warned that the Agyapa deal could attract a bad credit rap to Ghana.
Meanwhile, the Finance Ministry recently hinted at borrowing a staggering GHC 22.7 billion within the next three months through domestic bonds.
In spite of all these questionable borrowings, the Ministry is claiming was its Codi-19 fiscal spending that that has attracted the bad credit ratings from S&.
Critics will not have that excuse though, as they accuse the government of irresponsible spending even before the Coronavirus outbreak in Ghana.
Indeed, even amidst the so-called fiscal challenges amidst Covid-19, the Akufo Addo administration is being accused of reckless expenditure and lack of transparency in how these public funds are expended.
A few days ago, global anti-corruption organisation Transparency International referenced the International Monetary Fund’s (IMF)’s anti-corruption tracker for funds accessed by hard-pressed countries and Ghana was one of the few African countries whom the IMF think has not demonstrated any commitment to tackling corruption in how it is spending the US$ 1 billion loan it accessed from the IMF.
Whatsup News is uncovering disturbing conflicts of interest on how these funds are being expended, with the Finance Minister’s interest firmly secured in some of these transactions.
The latest rating is coming on the back of the earlier one done in April 2020 which showed a slightly better rating of B. The latest B- is a few levels below the April outlook.