Ghana describes Fitch’s downgrade as very harsh

The Minister of Finance, Mr Seth Terkper, has said the downgrading of Ghana from ‘B+’ to ‘B’ by Fitch, an international rating agency, is very harsh and totally uncalled for.

He said the agency did not take into consideration major economic interventions that the government was undertaking within the short to medium term.

Mr Terkper, currently in Washington for the ongoing World Bank and International Monetary Fund (IMF) meetings, who spoke with the Daily Graphic on telephone, said the economy had registered some modest growth within the short term.

Throwing more light on the rating, Mr Terkper said the country was implementing various restructuring programmes which included the periodic adjustment of petroleum and utility prices to bring sanity into the economy, while at the same time shoring up government revenue.

He said the economy was on track and the government was fully committed to implementing various fiscal policies, adding that it was implementing a three-year adjustment programme, since a single-year adjustment did not produce full results in a single year.

Mr Terkper said  the  medium-term economic outlook remained very solid and that the government was  targeting a five to six per cent budget deficit in the near term, while maintaining seven to eight per cent growth.

He said while the advanced economies were growing at two to three per cent, the country was growing at seven per cent, according to the Ghana Statistical Service.

The Minister acknowledged the challenges in the wage bill and said efforts were being made to address them, since that issue could not be addressed overnight.

He stated that the gradual increase in Ghana’s oil and gas production, value addition and the diversification plan to boost agriculture, in particular, as well as a vibrant and growing services sector , were  still driving the projected annual economic growth rate of seven to eight per cent over the medium term.

He said it was in that respect that the government launched its three-year fiscal consolidation plan to boost a very strong economic environment and outlook and said despite the challenges it faced, Ghana’s growth was expected to remain above a healthy seven per cent at the end of 2013.

He said the report completely ignored the various growth factors and that Fitch focused narrowly on the short term and high level compensation challenges facing the economy.

“The current difficulties are an aberration and we are already showing signs of returning to the medium-term targets we have set out,” the Minister stated.

He said despite the lower rating, the country was  viewed as being among the fast growing economies within the sub-region and that the IMF, in such situations, allowed for a three-year adjustment programme.

He said he still held the very  strong view that Fitch’s downgrade did not sufficiently reflect the country’s structural measures and deep reform efforts, notably in public financial management.

Source: Daily Graphic