Treasury Secretary Ken Ofori-Atta has expressed disappointment at the recent downgrade of the country’s long-term issuer default ratings (IDRs) from “CCC” to “CC”.
This is the second time in 2022 that the rating agency has downgraded Ghana’s credit rating.
The minister reacted to the recent downgrade in an address on the country’s economic status on Wednesday, saying it was unfortunate for the country’s economy as the country would lose foreign investors in this regard.
“The Fitch downgrade issue is unfortunate. In their email to us, they referenced the Bloomberg article that influenced their decision. It kind of pushes bonds further in the international market, leading to additional losses for investors.”
However, Ken Ofori-Atta is optimistic that the ratings will force the government to initiate economic programs that would allow the economy to bounce back and return to some positive ratings.
“Once we have been downgraded to Triple C, we also expect that the economic program that is being worked on, which will form the basis for the IMF discussions, will help us get back to some strong matrices so we can get some ratings in revised at this time.
“We are confident that returning to some form of access to capital markets will take time, two to three years, and therefore we will also work on our ratings during this period in order to be able to return,” he said.
It is worth remembering that on September 23 the Fitch rating agency downgraded Ghana’s credit rating.
The downgrade, Fitch said, reflects an increased likelihood that Ghana will conduct a debt restructuring amid mounting funding problems, rising interest costs on domestic debt and a continued lack of access to Eurobond markets.
“There is a strong possibility that the International Monetary Fund’s support program currently being negotiated will require some form of debt treatment due to rising interest costs and structurally low revenue as a percentage of GDP.”
“We believe this will take the form of a debt swap and will qualify as a distressed debt swap based on our criteria,” she explained.
“However, we believe there could be an incentive to spread a debt restructuring burden between domestic and foreign creditors and as such do not currently have a solid basis to distinguish between foreign and local currency ratings,” she concluded.