Govt rejects Moody’s latest rating, says it is puzzling

The government of Ghana has rejected Moody’s downgrade of Ghana’s credit rating.

According to Finance Minister, the government is puzzled by the latest rating.

In its latest rating, Moody’s downgraded Ghana’s long-term issuer and senior unsecured debt ratings to Caa1 from B3.

It also changed the outlook to stable from negative.

Moody’s indicated that the new rating reflects the woes of Ghana in fixing its liquidity and debt challenges.

“The downgrade to Caa1 reflects the increasingly difficult task the government faces addressing its intertwined liquidity and debt challenges. Weak revenue generation constrains government’s budget flexibility, and tight funding conditions on international markets have forced the government to rely on costly debt with shorter maturity.”

Reacting go the rating, Mr. Ken Ofori-Atta, the Finance Minister said it was puzzled by the rating considering the fiscal consolidation measures announced by the government.

“We are at odds to understand Moody’s assertion of the deterioration of Ghana’s institutional strength, given Ghana’s reputation as a beacon of democracy in Africa.”

“The government of Ghana is therefore completely puzzled by the decision to downgrade Ghana’s credit rating to Caa1, despite the series of progressive engagements we had with the team from Moody’s, the quality of data supplied, as well as the medium-term economic and fiscal focus of the government, underpinned by key fiscal consolidation reforms such as the policy decision to cut expenditure by 20%, as recently announced by the Minister of Finance,” government added in the statement.

He added: “Unfortunately, Moody’s rejected our appeal and went ahead with the downgrade despite all the concerns raised, which we believe were not factored into their decision.”

“Prior to the announcement, between 28th January to 3rd February 2022, Moody’s virtually engaged senior government officials of the Ministry of Finance and the Bank of Ghana on various issues. The Moody’s team was led by Lucie Villa (Lead Analyst on Ghana at Moody’s) and supervised by Matt Robinson. It is worthy to note that Lucie Villa only recently (beginning of January 2022) took over as the primary analyst covering Ghana for Moody’s. We are very concerned that Ms. Villa may not properly understand and evaluate Ghana’s deepening credit story since obtaining our first credit rating back in 2003. She also has not visited the country since assuming the role and as such this downgrade at this critical time was based entirely on a desktop exercise, virtual discussions and what we believe to be the omission of critical data provided.”


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