Blames NDC, Six Years Into Akufo-Addo’s Administration
Sheila Bartels, the New Patriotic Party (NPP) Member of Parliament (NPP) for Ablekuma North, has almost left wearily crying and blaming the opposition National Democratic Congress (NDC) for the latest downward reviews of Ghana’s economic outlook by some credit agencies.
Last Friday, Moody’s Investors Service (“Moody’s”) downgraded the Government of Ghana’s long-term issuer and senior unsecured debt ratings to Caa1 from B3 and changed the outlook to stable from negative.
The downgrade to Caa1 reflects the increasingly difficult task the government faces addressing its intertwined liquidity and debt challenges.
The rating particular that of Moody’s got Sheila Bartels, helplessly contending that the opposition NDC should be held accountable for the situation, and not the managers of the economy.
Finance Minister, Ken Ofori-Atta, the Minister of State at the Finance Ministry Charles Adu Boahen, John Ampontuah Kumah, Professor George Gyan-Baffour, Anthony Akoto Osei, Yaw Osafo-Maafo have been in-charge of the economy since 2017 with President Nana Akufo-Addo several times that his men are better managers of the economy compared to the erstwhile John Mahama and the NDC team.
Reports available to The Herald suggest Vice-President Mahamudu Bawumia, who is chairman of the Economic Management team, is mostly not consulted in the taking and implementation of certain key decisions on the economy. A typical example is the E-levy.
Moody’s had noted that “weak revenue generation constrains government’s budget flexibility and tight funding conditions on international markets have forced the government to rely on costly debt with shorter maturity.
Moody’s downgrade, follows the recent Fitch Ratings which downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘B’ with a negative outlook.
Moody’s estimates that interest payments will absorb more than half the government’s revenue over the foreseeable future, which is exceptionally high compared to peers at all rating levels. As a remedy, the government has proposed sharp fiscal consolidation and a switch to borrowings from external partners on more favourable terms.
However, the strategy comes with sizable implementation risks, especially in a still-fragile post-pandemic environment and while international market creditors price in very wide risk premia.
But after the Moody’s downgrade, Ms. Bartels, daughter of Kwamina Bartels, a Minister in the Kufuor administration charged “Congratulations to the NDC. You’ve done a great job. Through your excellent efforts, GHANA, the country you claim to love more than all of us, has been downgraded by the credit agencies. Well done,” she posted on Facebook.
Five years on after the Akufo-Addo government assumed leadership of the country, Sheila Bartels is accusing the Mahama administration of mismanaging the economy.
She said that the Akufo-Addo government has managed the economy better than the Mahama administration and should be credited with improving what they inherited from the Mahama government.
“Who has mismanaged the economy? My goodness! Please set aside all the propaganda you’ve been fed and realistically look at things. This government has been better managers of the economy than the NDC ever would!
“Even without a pandemic, did the NDC not take a country from prosperity during Kufour into a state where we had to go to the IMF? When the then President said the meat was down to the bone?
“Didn’t this government take the gargantuan debt left behind, pay them, initiate several life-saving interventions and still grow the economy by over double of what we inherited?
“No wonder, JM says we have short memories! Indeed, if we should all care as much, let us not listen to the loud narratives. I’m in the centre of it so I know that if you enter the easy wide way, as the bible said it leads to DESTRUCTION!!!” he posted.
Fitch had said that Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘B-’ spells out a negative economic outlook for Ghana.
Fitch, in its latest report, explained the downgrade of Ghana’s IDRs and Negative Outlook reflect the sovereign’s loss of the country’s access to international capital markets in the second-half of 2021, following a pandemic-related [COVID-19] surge in government debt.
“This comes in the context of uncertainty about the government’s ability to stabilise debt and against a backdrop of tightening global financing conditions. In our view, Ghana’s ability to deliver on planned fiscal consolidation efforts could be hindered by the heavier reliance on domestic debt issuance with higher interest costs, in the context of an already exceptionally high interest expenditure to revenue ratio,” Fitch said in its report on Ghana.
Moody’s explained that “while Ghana’s external buffers and moderate external debt amortization schedule in the next few years afford the government a window of opportunity to deliver on its strategy, balance of payments pressures will build up the longer government’s large financing requirements have to rely on domestic sources.
“The stable outlook balances Ghana’s significant fiscal challenges, large refinancing needs and constraints on access to funding against the government’s pre-pandemic track record of relatively effective policy delivery and maintenance of a variety of funding sources. Ghana’s institutional framework and dynamic economy remain key credit supports, with economic growth forecasts of around 5% over the medium term.
“Concurrent to the rating downgrade, Moody’s has also downgraded Ghana’s bond enhanced by a partial guarantee from the International Development Association (IDA, Aaa stable) to B3 from B1, reflecting a blended expected loss now consistent with a one-notch uplift on the issuer rating.
“Finally, Moody’s has lowered Ghana’s local currency (LC) and foreign currency (FC) country ceiling to respectively B1 and B2 from Ba3 and B1. Non-diversifiable risks are appropriately captured in a LC ceiling three notches above the sovereign rating, taking into account relatively predictable institutions and government actions, low domestic political, and geopolitical risk; balanced against a large government footprint in the economy and the financial system and current account deficits.
“The FC country ceiling is maintained one notch below the LC country ceiling, reflecting constraints on capital account openness and fiscal policy effectiveness against robust foreign exchange reserves buffers and an average monetary policy effectiveness.