Government unhappy with S&P Global downgrade

Business News for Wednesday, September 16, 2020

Source: FM class

2020-09-16

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The Finance Ministry has called the recent downgrade of Ghana’s credit rating from B to negative B by the international rating agency S&P Global as regrettable.

He said in a press release issued yesterday that while he acknowledged that the downgrade was widespread, affecting other countries around the world, he was concerned that rating agencies would choose that path at a time when countries, including Ghana, were struggling. against an unprecedented crisis.

“It is very regrettable that the rating agencies choose to downgrade our countries in these unprecedented times,” said the statement, issued by the Department of Public Affairs of the Ministry of Finance.

“As the South African Revenue Services Commissioner recently argued: ‘While we understand the underlying factors pointed out by rating agencies, we believe that during a time of crisis like this, when the entire world is recalibrating and redefining its economic situation, for any rebate that is issued during this time is like kicking us when we are down ”.

“We therefore call on rating agencies to seriously consider freezing any rating action during global pandemics such as COVID-19,” he added.

Degrade

The statement was in response to a publication by S&P Global Ratings that communicated its decision to downgrade Ghana’s long-term local and foreign currency sovereign credit ratings to B-negative from B.

However, the agency confirmed the short-term ratings at B, and the outlook was considered stable.

The ministry said the rating downgrade was primarily due to the government’s decision to increase public spending to help contain the impact of COVID-19’s impact on lives and the economy.

Other countries

He said a review of global credit ratings indicated that Ghana was not the only country to see sovereign credit ratings downgraded, noting that more than 80 countries had been affected, with negative outlook revisions for the year of more than 100.

“Most of these credit rating downgrades and negative outlook revisions are heavily concentrated in countries that previously had B / B2 credit ratings,” he said.

“These adverse rating actions have affected almost every continent as rating agencies react to the effects of the pandemic on the global economy,” he said.

Saving lives

The ministry said the government was focused on saving lives and livelihoods, and that required some temporary fiscal and economic adjustments, including some one-time expenses.

“The government chose to save lives and therefore instituted temporary life-saving initiatives and interventions aimed at protecting the general population against the negative economic effects of the pandemic,” he said, mentioning interventions to include water subsidies. and electricity to support vulnerable households during the lockdown period.

“The government also granted credit to micro, small and medium enterprises (MSMEs) whose businesses were the most affected by the closure,” he said.

He noted that despite the interventions, economic fundamentals remained strong and prospects for recovery were high.

That, he said, was reflected in the positive narrative on how Ghana had managed the economy under the pandemic.

Recovery path

He said the government has a clear path toward restoring economic stability in the short and medium term.

He said that he will maintain the progress made and accelerate it through the GH ¢ 100 billion Ghana CARES transformation program within the general policy framework of Ghana Beyond Aid and beyond the pandemic.