Dr Mark Assibey-Yeboah, former Member of Parliament (MP) for New Juaben South, is calling for an urgent economic rescue plan, in order for Ghana’s debt crisis not to degenerate into a bigger economic crisis.
According to the New Patriotic Party (NPP) member and onetime chairman of the Parliament’s Finance Committee, the country and its economic managers, need to tie down a fund programme as soon as possible to enable Ghana to restructure its debt.
Dr Assibey-Yeboah’s call comes after Standard and Poor’s (S&P) Global Ratings downgraded Ghana further from B-/B to CCC+/C.
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.
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 the 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.
Commenting on the development on his Facebook timeline, the former Chairman of Parliament’s Finance Committee noted that Ghana’s downgrade has come at a very critical time.
“S&P’s credit downgrade of Ghana has come at a very critical time. Their decision largely reflects our worsening fiscal and external balance sheets. Our debt crisis could degenerate into a bigger economic crisis if help does not come our way quickly.
“We need to tie down a Fund program as soon as practicable in order for us to be able to restructure our debt. Another food for thought,” Dr Mark Assibey-Yeboah concluded.
Ghana on July 1 announced it was approaching the Washington-based International Monetary Fund, IMF, for an economic rescue programme.
A team from the IMF, has since had initial contact with major stakeholders during a one-week visit to Accra between July 6 – 13, 2022.