Despite the recent reduction by international rating agency, Standard & Poor’s (S&P), President Nana Addo Dankwa Akufo-Addo is optimistic that Ghana’s economy would recover.
Ghana’s global and domestic credit ratings were cut by S&P last week from B-B’ to CCC+C with a bleak economic outlook.
S&P claims that increased finance and external pressure on the economy were to blame for the rating.
Even though he acknowledges that things are difficult, Nana Akufo-Addo asserts that things would improve for the nation’s economy soon.
The President was broadcasting on a Tamale-based radio station.
“Yes, the difficulties are there, and I want to minimize the difficulties that are affecting the lives of ordinary people in a very negative way. What I am saying to the people of Ghana is that, they should continue to have confidence,” the President stated.
The judgment of the credit rating agency has already been met with dissatisfaction by the Finance Ministry.
The administration has reportedly made some proactive steps to rebuild the economy despite the effects of external shocks on the world economy.
The 30% reduction in discretionary spending was cited as one of the important income and expenditure reforms that have been put in place.
The President is certain that Ghana will overcome these obstacles as quickly as possible.The government is committed to navigating the economy.
We accomplished this when I initially took office, and Nana Akufo-Addo emphasized, “I am committed and strongly of the conviction that we can do it again because the policies are sound and are about putting Ghana in a strong position.
The International Monetary Fund (IMF) designated Ghana as having a “high risk of debt distress” in April 2015 when it authorized a $918 million facility for Ghana, indicating that the nation was unable to pay its debts.
The IMF facility started a program to manage the economy of the nation and to restrain government spending in order to maintain fiscal responsibility.
However, the government hastily abandoned the initiative.
It has been determined that throughout the period of ten years between 2011 and 2020, the nation used petroleum revenues to service its debt by allocating 74% of withdrawals from the Ghana Stabilization Fund to debt repayment.
According to the 2022 African Economic Outlook, Africa’s recovery efforts are in danger and there are fewer chances for rapid and sustainable economic growth.
The African Development Bank (AfDB) report also noted that despite growth recovery and debt relief initiatives like the Debt Service Suspension Initiative (DSSI), the Common Framework, and the International Monetary Fund’s general allocation of $650 billion equivalent in Special Drawing Rights, Africa’s debt-to-gross domestic product (GDP) ratio will remain above pre-pandemic levels (SDRs).
Even while these actions have increased external buffers, which has reduced liquidity pressures in many countries, the report claims that they have not eliminated debt vulnerabilities because as of February 2022, 23 African nations, including Ghana, were either in or at risk of debt distress.