‘Moody’s rating does not resolve the precarious debt burden and poverty levels’ – Prof Gatsi
Adnan Adams Mohammed
Professor John Gatsi has slammed the recent jubilation by the government of Moody’s rating on Ghana’s economy with a positive outlook (B+) as not necessary.
He said in an interview that, “Moody’s rating does not resolve the precarious debt burden ratios and different levels of poverty being experienced by Ghanaians. Indicating that, water, poverty, energy poverty, healthcare access challenges and growing joblessness against the expectations of effectively integrating SDGs in our budget’s implementation must be the indicators to measure the performance of governments”.
Moody’s rating agency recently rated Ghana’s economy as one of the better performing economies in the world with positive creditworthiness. But, the renowned economist has taken a swift against the rating and described it as not true reflection of the economy.
“Politicians should also assess themselves with the country’s performance on the SDGs and not just procured rating services”, Prof Gatsi posited.
Adding that, “The partial guarantee from AfDB accompanying the intended issuance of the US$3 billion Eurobond will strengthen Ghana’s drive to borrow and not necessarily the Moody’s rating.”
Credit rating agencies can be unfair and even determine the prospects of a government. This is why the European Union introduced regulatory measures within which credit rating agencies should operate, he further postulated.
“Moody’s isn’t immured from bias and methodological inconsistency, hence putting high premium on Moody’s rating might not be helpful. The IMF’s Article IV report (December 2019) is before us must be taken more seriously”, he noted supporting a comment made by now President Nana Addo Dankwa Akufo-Addo in 2016 on same Moody’s ratings.
In 2016 a few months to the general elections, Moody’s put Ghana’s Credit Ratings at B3 with a stable outlook having previously put the outlook at negative but this was disputed by the then opposition led by then-candidate Nana Addo Dankwa Akufo-Addo.
The rating agency of international repute reported that it’s rating of Ghana’s Long Term Bond Ratings from negative to stable had been due to “significant fiscal deficit reduction and success in implementing structural reforms over the past year, as well as reduction in government liquidity risk on the external side.”
It had also indicated “that the proceeds of the US$750million Eurobond earmarked for debt repayments is part of the key drivers for the stabilization of the rating.”
“Improved balance of payments dynamics, including improved FDI inflows and continued development of oil and gas resources” had also been given as reasons.