Accelerate fiscal consolidation efforts to restore credit downgrades – Economist

Minister of Finance, Ken Ofori-Atta

Economist Courage Martey called on the government to accelerate efforts to improve the country’s fiscal consolidation position in the short to medium term.

The call comes on the back of international ratings agency, S&P Global Ratings has pushed Ghana’s debt situation further into speculative territory, downgrading its sovereign ratings in foreign and local currencies to CCC+/C from B-/ B with a negative outlook.

Reacting to the development, Courage Martey said measures to accelerate Ghana’s path to fiscal consolidation will restore current downgrades by some rating agencies.

“There are a number of things that need to be done for us to get an upgrade. Much of this depends on the replenishment of fiscal and external buffers, as this has been the primary concern for investors. There must be an improvement in our budget deficit situation. Now if you look at the statement from S&P, for example, they basically looked at the need to run a primary surplus equivalent to 2% of GDP,” the economist told Citi Business News.

“It is a tall order although the government has already signaled that it is striving to achieve a primary surplus equivalent to 0.4 of GDP. We are not far off from where the fiscal position should go, except that it is moving slower than the ratings agencies expected, so the government should be able to pick up the pace of fiscal consolidation, which would be good news to get us back above the current degraded levels. where we found ourselves,” he added.

Meanwhile, the current downgrade by S&P Global Ratings further threatens Ghana’s debt sustainability efforts, with many investors demanding a higher credit risk premium.

The downgrade will further increase the cost of borrowing and servicing the country’s existing debts.

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