S&P told to use up-to-date data in rating Ghana

The ratings company, Standard & Poor’s (S&P) has been asked to use updated data when determining the sovereign credit ratings of Ghana.

The Think Tank, Centre for Policy Analysis (CEPA) says S&P’s recent rating of Ghana, when the country was rated B/B was based on 2010 data indicating that the outcome was “unsatisfactory”.

S&P’s rating on the country was however, positive compared to the B- Ghana had in the previous rating.

Dr Joe L.S. Abbey, the Executive Director of the Centre, said during the presentation of a paper reviewing Ghana’s economy where he also gave the outlook for 2012 today November 29, 2011, that “S&P should rely on up-to-date economic data from the IMF or from CEPA when rating Ghana.”

The Centre believes that the performance outcome for last year 2010 was particularly bad because “the rapid accumulation of new arrears in excess of arrears cleared resulting in a rise in the net stock by a sizeable amount,” adding that, “As much as GH¢410 million of payment vouchers issued by the Controller & Accountant General’s Department (CAGD), the encashment of which did not take place.”

“Using the same unsatisfactory 2010 outcome, S&P produced its latest unfavourable rating for Ghana,” Dr Abbey told the gathering in Accra.

In August 2010, S&P lowered Ghana’s credit ratings from B+ to B citing lack of clarity in the country’s oil sector, the management of government’s oil revenues as well as the large fiscal deficit.

The rating however, which had a stable outlook, placed Ghana at par with Kenya, Sri Lanka and Bolivia.

A credit rating is S&P’s opinion on the general creditworthiness of a country or institution or the creditworthiness of a country with respect to a particular debt security or other financial obligation.

Credit ratings have become widely acccepted as investors find them convenient tools for differentiating credit quality.

By Emmanuel K. Dogbevi & Ekow Quandzie