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S&P downgrade: Government's economic measures not yielding results – Economist

Lord Mensah Dr Lord Mensah Professor Lord Mensah, Economist

Wed, 10 Aug 2022 Source: starrfm.com.gh

Associate Professor at the University of Ghana Business School, Lord Mensah has described as surprising the government’s response to S&P’s downgrade of Ghana’s credit risk.

The Global credit rating agency downgraded Ghana’s rating from B-/B to CCC+/C, putting the country’s creditworthiness into junk status.

However, the government in response said it was disappointed with the decision due to “bold policies implemented in the 2022 budget”.

But, Speaking to Starr News Prof Mensah indicated that any significant impact the measures the government is alluding to will not take immediate effect.

“I will say that the measures that have been put in place if really they are to reflect that, will be in the next possible ratings. So let’s see how in the next six months the ratings will come out. For now, what was put out the impact has not been felt.

“If you look at the revenue side of the policies that were rolled out, the main one that we were relying on, which is the E-levy, has not yielded as we expected,” he explained.

Prof. Mensah added the government’s modal use and the input did not favour them and cannot blame the rating agency.

“I was surprised to see the reaction and these are all transitions that an economy goes through. You can be downgraded from tripe A. The US used to be a triple-A country but after the 2008 financial crisis, it now had double-A.

“So effectively the transition you may have to go through but it is a matter of working hard making sure that you put prudent measures in place to move either up or if you don’t put good measures you come down in the rating.”

Source: starrfm.com.gh