Gov’t rejects Moody’s downgrade of Ghana’s credit rating

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The Government of Ghana is unhappy with a credit rating agency, Moody’s, for downgrading Ghana’s Long-Term Issuer and Senior unsecured bond ratings to Caa1 from B3.

According to the government, the latest fiscal consolidation measures disclosed by the Finance Minister and the 2022 budget, which are anchored on debt sustainability and a positive primary balance, largely address the concerns brought up by Moody’s for downgrading Ghana.

Moody’s downgrade to Caa1 from B3 with a stable outlook, follows a similar action taken by another rating agency, Fitch.

According to Moody’s, it downgraded Ghana’s long-term issuer and senior unsecured debt ratings following the woes Ghana is facing in fixing its liquidity and debt challenges.

Aside from the downgrade, it also faulted ineffective revenue generation as a cause, since that has not been able to afford the government the opportunity to be flexible with its expenditure.

Responding to the downgrade, in a press statement, the Finance Ministry described the rationale for the downgrade as contradictory.

The Ministry added that it is very concerned that the Lead Analyst on Ghana at Moody’s, Ms. Lucie Villa, may not properly understand and evaluate Ghana’s deepening credit story since obtaining its first credit rating back in 2003, and added that she also has not visited Ghana since assuming her role in January 2022, and as such, the downgrade at this critical time was based entirely on a desktop exercise, virtual discussions between 28th January to 3rd February 2022 and what the Finance Ministry believes to be the omission of critical data provided.

While noting that the government was completely puzzled by the decision to downgrade its credit rating, the Finance Ministry stated that this singular action by Moody’s confirms the notion held by many that there is an urgent need for reforms in the conduct of rating agencies given their ownership structure and the ramifications that their actions have on Sovereigns, especially, in Africa.

It added that the call for rating reform, which was loud during the peak of the COVID-19 pandemic, must be revived as a matter of urgency.

The Ministry says it officially appealed Moody’s downgrade of Ghana, but
it was unsuccessful.