S&P ratings: Government ‘refused to listen’ – Bright Simons

Bright Simons, a Vice President of Imani Africa, has indicated that the government of Ghana failed to signal forcefully to the market intentions for fiscal consolidation hence Standard and Poor’s (S&P) Global Ratings of the country to CCC+/C from B-/B.

According to him, such conduct by the government will further trigger another downgrade.

“The govt of Ghana was told that if it failed to signal more forcefully to the market its intentions to aggressive fiscal consolidation, such conduct will trigger another downgrade. “So sad that it refused to listen. As usual,” Bright Simons tweeted.

The American credit rating agency on Friday, August 5, pushed Ghana’s debt further into speculative territory, lowering its foreign and local currency sovereign ratings.

In a marketwatch.com report sighted by GhanaWeb, S&P said its outlook for the country remains negative, “reflecting Ghana’s limited commercial financing options, and constrained external and fiscal buffers.”

S&P which is one of the ‘Big Three’ credit-rating agencies, including Moody’s Investors Service and Fitch Ratings in their report stated that the “Covid-19 pandemic and the conflict in Russia have magnified Ghana’s fiscal and external imbalances.”

“There is also demand for foreign currency that has been driven higher by several factors, including nonresident outflows from domestic government bond markets, dividend payments to foreign investors and higher costs for refined petroleum products,” the report stated further.

S&P Global Ratings noted that Ghana has also been affected by a lack of access to Eurobond markets with local authority’s passage of a levy on electronic transactions and legislation to tighten exemptions on tax payments including for VAT, among other moves.

“While these changes could improve the tax take going forward, the situation remains challenging, and over the first half of 2022, the fiscal deficit has exceeded the government’s ambitious target,” S&P Global Ratings stated.