Chartered Economist Mr. Emmanuel Darkwah has noted that the downgrade of Ghana’s economy by S&P is problematic.
The economist posited that the rating will discourage investors from having confidence in the local economy.
He examined that the rating gives investors a negative perception of Ghana, and getting loans would be difficult.
“Even if we get the loans, the interest or premium we will pay on them would be high.”
He said a credit rating, is an assessment of the ability of a borrower – whether it’s a company or a government – to repay its debts.
“Lower credit ratings drive up the cost of borrowing,” he told the host of Frontline on Rainbow Radio 87.5Fm.
He added that our access to the international capital market is under threat and existing commercial loans including euro bonds and their trading would be very expensive for Ghana.
“The truth is that it would worry Ghana in terms of our probability to get into the international capital market,” he added.
Meanwhile, he has expressed worry over the ratings stating that it was unfair and disappointing.
He said S&P failed to recognise the policies and measures adopted by the government to address the issues facing the economy.
He advised African countries to adopt homegrown measures, prevent corruption and maintain fiscal discipline so they will stop the over-dependence on credit ratings and borrowing.
A recent United Nations report called for a reform of how private credit rating agencies are regulated.
The findings argued that the agencies lack accountability and make it hard for poor countries to fulfil their human rights obligations.
Aside from these suggestions, the research called for changes in how the IMF and private credit rating agencies evaluate debt in order not to penalise countries for making important investments in health care and other public services especially when Covid-19 hit the world.
By: Rashid Obodai Provencal/Rainbowradioonline.com/Ghana
