S&P Rates Ghana’s Economy High
International rating agency, Standard & Poor’s has raised Ghana’s credit rating from category B- to B.
This follows what it believes to be Ghana’s “improved monetary policy effectiveness” and stable economic outlook.
“Ghana’s improving banking sector stability and lower inflation supports our view that the effectiveness and transmission mechanism of its monetary policy have improved. We are therefore raising our long-term ratings on Ghana to ‘B’ from ‘B-.”
S&P’s recent report released on September 14, 2018 stated that it could affirm the short-term foreign and local currency sovereign credit ratings at ‘B’ because the outlook is stable.”
The latest rating by the international agency comes at a time when the business community have raised concerns over the steep fall of the Cedi.
Ghana’s currency for the past two months is struggling to be at par with major trading currencies especially the US dollar, a situation, Financial experts argue if not checked would be out of control.
But, S&P said its upgrade of Ghana’s rating reflects their assessment that “Ghana’s monetary policy effectiveness has improved, albeit from a low base, and will support the credibility of the inflation-targeting framework over the period.”
It also cited the Central Bank’s recapitalization of banks in Ghana will go a long way in strengthening the economy.
“In our view, the Bank of Ghana’s (BoG) policy rate has also been fairly effectively transmitted through the financial system to market participants. The government’s recapitalization of the banking system in 2018 is a fiscal expense weighing on our fiscal assessment, but should ultimately strengthen the banks and allow them to support financial intermediation in the economy,” S&P added.
Some economists, members of the opposition National Democratic Congress (NDC) and many Ghanaians, have criticized the government for failing to fix the cedi’s fall, and also deal with its general impact on the larger economy.
But the Vice President, Dr. Mahamudu Bawumia, who is also the head of government’s economic management team said the economy has performed well.
Dr. Bawumia largely blamed the cedi’s depreciation on the strength of the US dollar, saying other currencies like the pounds were also struggling against the US dollar.
“You look at the economic growth, you look at the interest rates, you look at inflation, you look at the deficit, you look at the external accounts, you look at the gross international reserves and you look at the debt to GDP ratio, all these fundamentals indicate that Ghana’s economy is getting stronger fundamentally.”
The Minority Spokesperson on Finance, Cassiel Ato Forson, subsequently criticized the Vice President, Mahamudu Bawumia over the current state of the Ghanaian economy urging him to apologize for the inability of the NPP to revive the economy.
Mr. Ato Forson said reality has now dawned on the governing New Patriotic Party.
“He is now accepting that there are exogenous and external shocks that you can do nothing about? Is he now accepting that point and has he not been exposed as he speaks?”