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Latest Fitch rating will either ‘woo’ or caution investors – Economist

Ken Ofori Atta Finance Minister5678 Ken Ofori-Atta, Finance Minister

Tue, 27 Sep 2022 Source: atinkaonline.com

Rev. Dr. Samuel Worlanyo Mensah, a senior lecturer at the Wisconsin International University College, Ghana, and an economist, has revealed that the recent Fitch ratings will either woo or caution investors on doing business in Ghana.

This statement comes after Fitch, an International Credit Rating agency, downgraded Ghana’s Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) to ‘CC’, from ‘CCC’.

In a statement, the credit rating agency said the downgrade reflects the increased likelihood that Ghana will pursue a debt restructuring given mounting financing stress, with surging interest costs on domestic debt and a prolonged lack of access to Eurobond markets.

It added that there is a high likelihood that the IMF support programme currently being negotiated will require some form of debt treatment due to the climbing interest costs and structurally low revenue as a percentage of GDP.

In August 2022, Fitch downgraded Ghana’s credit rating from ‘B-‘ to ‘CCC’.

The downgrade was announced on Wednesday August 10, 2022.

“The government has requested support from the IMF, which is likely to lead to additional financing from the IMF and other multilateral lenders. However, the government’s high interest costs and structurally low revenue as a percentage of GDP have increased the likelihood that IMF support would necessitate some form of debt treatment, although this is not our main scenario,” the statement from August 2022 read.

Reacting to the latest ratings in an interview with host of Atinka FM’s AM Drive, Kaakyire Ofori Ayim, Rev. Dr. Samuel Worlanyo Mensah said the ratings indicate how the economy is performing, the potential of the economy, and its challenges.

He revealed that the ratings have the tendency of either projecting the prospects of the economy in order to woo investors or give indications that the economy is going through recessions for investors to take precaution.

“The ratings are only an indication as to how they think the economy is performing and the potentials of the economy as well as the challenges. These ratings will either project the prospects of the economy in order to woo investors or give indications that the economy is going through recessions for investors to take precautionary measures,” he added.

Source: atinkaonline.com
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