Moody’s to downgrade many more countries – Economist

Dr Lord Mensah, a finance lecturer at the University of Ghana Business School, has noted that more countries will be downgraded by Moody’s in the coming days following the effect of the COVID-19 on the economy.

This was after the credit rating agency downgraded Ghana’s economic outlook to negative from positive on Monday April 20.

Already, South Africa’s economy has also been downgraded.

He noted that many more countries are expected to be downgraded because of the current development in the global economy.

He told Roland Walker on the AM Show on Joy News Monday that : “It is very important to have these ratings because the situation on the grounds in the first quarter of the year is completely different from the situation, we find ourselves now, and the possible the outlook going forward.”

Further, he said “Looking at what is happening, there is a tendency that our [Ghana] debt service will become a problem going forward. What we rely on to generate revenue in Ghana, possibly we might rely on exports but petroleum prices have drop drastically to about the lowest in 30 years.

“Looking in house, taxes that are to be generated the prospects is bad. Effectively, any ratings agency that relies on this input will downgrade your economy; it’s not only Ghana alone, a lot of countries will have their credit ratings downgraded.”

Sharing his views on the lifting of the partial lockdown by President Akufo-Addo on Sunday April 19, Dr Mensah said the president took the best decision for the country.

The decision by the President to lift the partial lockdown created mixed feelings among the Ghanaian public.

But Dr Mensah said : “Looking at our economic structure which is more informal that is people survive on daily basis, how they move from one point to another, it tells you that if you don’t take care and you use a model in America for Ghana you end up having the lockdown or the measures to curb the virus rather having more impact on the people than the virus itself.”

He further told the AM Show host Roland Walker on Joy News that : “I was reading a research and it gave me a signal that sometimes in a pandemic like this the measures that are being put in place to ensure that they hold up the virus rather comes to have more impact on the people than the virus itself.

“And I believe that the President and his scientific team looked at all this and they’ve realized that if we don’t take care this measure which is the lockdown is rather having more impact on the economy than the virus itself and that is why possibly the President soften his stance yesterday,” he told Joy TV Monday.

He further argued that that the structure of the Ghanaian economy is different from the western economies which they can cope with the lockdown.