Ghana Government protests ‘inaccurate’ Moody’s downgrade; says key data left out

The Akufo-Addo led government has protested the international credit rating agency, Moody’s recent downgrade of Ghana from B3 to Caa1 with a stable outlook on the Long-Term Issuer and Senior unsecured bond ratings.

According to the Finance Ministry, the forecast and projections had an inaccurate balance of payments statistics, lack of supporting quantitative analysis, or data on Environmental, Social, and governance credentials.

Moody’s recent rating comes barely a month after Fitch also downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘B’ with a negative outlook.

Fitch’s rating is the worst for the country in 22 years.

Moody’s in its decision to downgrade Ghana mentioned the “increasingly difficult task government faces in addressing the intertwined liquidity and debt challenges, pandemic induced revenue underperformance, tight funding conditions on international markets, materially decreasing governance and institutional strength and inflexibilities in the government budget.”

Reacting to the rating by Moody’s, the Finance Ministry questioned the “omission” of key material information such as the 2022 Budget expenditure control measures – 2022 upfront fiscal adjustments.

In a press statement issued on Sunday, February 6, 2022, the Ministry also protested the appointment of a new primary credit analyst for Ghana, only four weeks to the release of credit ratings.

“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.”

Touching on the issues raised by Moody’s, the Ministry noted that most had been addressed by the Government with the announcement of fiscal consolidation measures, which were anchored on debt sustainability and a positive primary balance.

“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.”

The Finance Ministry also disclosed that it appealed Moody’s rating, but was unsuccessful.

“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.”

“Unfortunately, it is also worthy to note that on a regional basis, there is ample evidence that Sovereigns on the African continent, in particular, have suffered more adverse rating actions than any other continent since the pandemic, despite the fact that the impact of Covid has been relatively manageable in Africa,” the statement added.

Source: Thenewsroomonline