S&P rating: Access to international capital market virtually blocked - John Kwakye

Director of Research at the Institute of Economic Affairs, Dr John Kwakye, has said the latest downgrade of the economy by Standard & Poor’s (S&P) from B-B’ to CCC+C will block access to the international capital market.

He stressed that the negative economic outlook would have a serious impact on the local economy.

In an interview with Citi Business, Dr Kwakye said, “the latest ratings will have a tremendous impact on our economy. Already, our access to the international capital market has been virtually blocked. This downgrade will further hinder the process of getting access to credit facilities in the next few months...We are in a very bad situation.”

In order to help the local economy gain credibility and regain investor confidence, he continued, it was prudent to reach a quick agreement on the potential financial bailout from the International Monetary Fund.

“I understand the IMF negotiations will take months. The delay won’t help us at all. We should be able to conclude this quickly. This will grant us the needed policy credibility.

“I am hoping that we will be able to conclude the negotiations quickly so that we can have some debt restructuring, financial assistance, and policy credibility to regain the trust of investors,” the economist added.

Meanwhile, the S&P report explained that the downgrade was attributed to the heightening financing and external pressures on the economy.

Standard and Poor's (S&P) Global Ratings, an American credit rating agency, downgraded Ghana's debt to CCC+/C from B-/B on Friday, August 5, pushing it further into speculative territory.

According to a report by marketwatch.com, S&P said its outlook for the country remains negative, "reflecting Ghana's limited commercial financing options and constrained external and fiscal buffers."

ESA/BOG