Deputy Minister for Finance Dr John Kumah has stated that the concerns raised by investors over Ghana’s ability to stabilise its debts have been exaggerated.
International ratings agency, Fitch, has downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from ‘B’ to B-.
The downgrade of Ghana’s IDRs and Negative Outlook reportedly reflected the sovereign’s loss of access to international capital markets in the second-half of 2021, COVID-19 pandemic-related surge in government debt.
According to Fitch, “this comes in the context of uncertainty about the government’s ability to stabilise debt and against a backdrop of tightening global financing conditions. In our view, Ghana’s ability to deliver on planned fiscal consolidation efforts could be hindered by the heavier reliance on domestic debt issuance with higher interest costs, in the context of an already exceptionally high-interest expenditure to revenue ratio.”
However, speaking on JoyNews’ Newsfile, on Saturday, Dr. John Kumah said Ghana has been unfairly treated.
“We sincerely believe that the concerns are being exaggerated and that Ghana particularly in this instance is being unfairly downgraded especially if the basis of the downgrade or concerns being raised is about the budget.
“Let us understand that this economy recovering from Covid-19 last year, has grown on an average of 5.2 per cent.”
Dr Kumah explained that the economy has grown over time and the Ghana Revenue Authority (GRA) has been able to raise more than its target.
“If you check the first-quarter growth from 2021, it was 3.3 per cent. Then we did 3.9 per cent. In the third quarter, Ghana grew by 6 per cent. We don’t have the fourth quarter yet but we all know that due to the Christmas festivity, the fourth quarter will be the highest.
“So if you take the average of the three quarters there is 5.2 per cent. The growth rate target for 2021 was 5 per cent. So if you are doing 5.2 per cent, it means you are doing well. Our budget deficit for last year was 9.4 per cent which I think we did 9.5 per cent, slightly above it.
“If you look at our revenue targets, GRA was given a target of GH¢57 billion, they ended up collecting about GH¢57.3 billion. So it is an economy that is growing above 5 per cent, meeting its revenue target”, Dr John Kumah pointed out.
He said government therefore does not “see the basis for such an exaggerated concern.”
According to him, the misunderstanding may be as a result of the impasse on government’s E-levy Bill in Parliament that seeks to widen the country’s net tax.
“Except to say that it is because of the E-levy impasse in Parliament, because of the nature of Parliamentary strength which is equal. So they are not sure about how our revenue targets are going to go in 2022, otherwise, we don’t see the very basis and the fears.”
Meanwhile, the Finance Minister, Ken Ofori-Atta has said that the Electronic Transaction Levy (e-Levy) Bill will be resubmitted when Parliament reconvenes on January 25, 2021.