‘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.
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