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Are credit ratings agencies punishing Ghana

because Ofori-Atta, Prez Akufo-Addo pointed out their biases?



Credit Ratings Agencies, Newscenta, bias, Africa,

Access to international capital markets presents many opportunities for Africa.

It helps diversify funding sources and makes countries less dependent on aid and multilateral and bilateral loans to finance investment and expenditure.

Another advantage of access to international capital markets is that governments can use the money according to their development priorities.

Successful participation in the global bond markets can also positively affect other capital flows to Africa, such as foreign direct investment, as it provides a benchmark of country risk.

High interest rates on Eurobonds
However, interest rates paid by African countries on Eurobonds or commercial debts are too high.


African governments pay 5% to 16% on 10-year government bonds compared to near-zero to negative rates for American and European governments.

Africa’s overinflated risk perception is not even informed by a historical record of default.

Generally, there’s a strong positive correlation between economic strength and creditworthiness, but high economic growth hasn’t typically translated into better sovereign ratings in Africa.

Credit rating agencies, which play a pivotal role in determining these interest rates, are not fair with Africa.

The biases against emerging market economies – especially African entities, both sovereigns and corporates are obvious.


A clear example is that though Argentina had in recent times defaulted on nine separate occasions on its debts, it paid in the region of six to seven per cent coupon rate when it went to the market to raise a 100-year bond.

However, Angola which had not defaulted since the end of the civil war was handed a two-percentage point more than Argentina on the same market.

Also, a comparison between a 10-year dollar-denominated Namibia Eurobond with one from Greece is highly indicative.

Despite its history of defaults, Greece 10- year bonds (Greece-10s) had a spread (over US Treasury bonds) of around 222.6 basis points at the height of the pandemic.

By contrast, Namibia’s-10 year bonds traded with a significantly higher spread – 481.6 basis points – even though both countries have similar credit ratings (Ba3).


The same pattern emerges when comparing the 10-year bonds with similar maturity of Mauritius and Italy.

At Baa1, Mauritius, one of two African countries with an investment grade rating is better off than Italy’s Baa3 which is only one notch above junk status.

And yet, Mauritius’s 10-year bonds had a spread of 245 basis points, against 92.7 basis points for Italy’s.

Azerbaijan, Brazil, and South Africa are all two notches below investment grade.

However, despite their similar credit rating profiles, South Africa-30 year bonds had a spread of 486 basis points, significantly above Brazil-30 year bonds 305 basis points and Azerbaijan-30 year bonds 365.12 basis points.


South Africa-30 year bonds have been trading at a higher premium, and their spread premium increased sharply at the height of the COVID-19 downturn and remained consistently above the spreads of the country’s peers throughout 2020.

Prohibitively high refinancing costs

Developing countries are facing prohibitively high refinancing costs.

Egypt, for instance, which must refinance a chunk of its debt in 2020, is paying around 12.1%, above its average cost of 11.8%.

Similarly, Ghana is paying 15% compared with an average of 11.5%.


With African governments paying default-driven borrowing rates, it is unsurprising that interest expenses have become one of their highest and fastest-growing budgetary expenditures.

These premiums heighten the risk of debt overhang and constrain fiscal space, undermining governments’ capacity to respond effectively to recurrent adverse shocks.

These premiums also have wide-ranging consequences for macroeconomic management and sustainable development in the long run.

By deterring investors, they heighten liquidity constraints in the short term.

And by limiting access to long-term financing, they undermine the process of economic transformation necessary for Africa’s effective integration into the global economy, ensnaring countries in a perpetual debt-distress trap that threatens global financial stability.


Reshaping misperceptions around credit risks and changing African assets’ risk/return profile also hinges on fostering consistency and improving oversight of credit rating agencies.

From this evidence, it should be clear that Ghana’s Finance Minister Ken Ofori-Atta and President Nana Akufo-Addo have solid grounds to criticise the biases of ratings agencies.

The ratings agencies are gods and above criticism of the obvious.

If ratings agencies are punishing Ghana by downgrading the economy because the obvious backed by empirical evidence is pointed out to them, then let posterity judge.

It is interesting how some Ghanaian financial experts seized with this empirical evidence are among those justifying the downgrade on grounds of retaliation for criticism.



Ofori-Atta appeals to Parliament to approve revenue measures



Ofori-Atta, Newscenta, revenue measures, debt restructuring, parliament,

Finance Minister Ken Ofori-Atta has informed parliament of his intention to present necessary fiscal adjustments to the house in august after the debt operation is completed.

Outstanding revenue mobilisation bills

Already, he said the Income Tax (Amendment) Bill, Excise Duty & Excise Tax Stamp (Amendment) Bills as well as the Growth and Sustainability Levy Bill, are outstanding in Parliament.

According to him, the consideration and approval of fiscal measures by Parliament are critical for recovery from the current economic crisis.

Facilitating IMF Board approval


The Minister therefore entreated Parliament to prioritise the approval of the outstanding revenue mobilisation bills to facilitate the Board Approval for International Monetary Fund (IMF) Programme staff level agreement by the end of March, 2023.

“We are still counting on you for the passage of all the outstanding revenue Bills which are necessary for effective Budget Implementation as well as boosting our efforts at increasing our Tax-to-GDP from less than 13% to the sub-Saharan average of 18,” he stated.

Expected impact of IMF Board approval

He is confident IMF Board approval will restore macro-economic stability, ensure debt sustainability as well as provide critical social protection for the benefit of Ghanaians.

Factors that impacted economy negatively


COVID-19, Russia-Ukraine war, soaring energy and food prices, higher interest rates, a strong dollar and a global slowdown negatively affected the economy.

Ghana seeking $3 billion loan

Ghana and the International Monetary Fund (IMF) have reached staff-level agreement on economic policies and reforms to be supported by a new three-year arrangement under the Extended Credit Facility (ECF) of about $3 billion.

But, the IMF has made it clear that the Board approval of the deal is contingent on a successful debt exchange programme.

Broader govt response strategy


Addressing Parliament on the ongoing debt restructuring efforts, Ofori-Atta explained that debt operations are a composite part of a broader government response strategy for addressing the current challenges.

While being optimistic about IMF programme to boost confidence in the economy, he emphasized that complementing it with enhanced domestic mobilisation efforts is critical.

4 out of 5 agreed Prior Actions in the Staff Level Agreement

The Finance Minister averred that the passage of the Bills will enable government to complete four out of five agreed Prior Actions in the Staff Level Agreement.

Agreed Prior Actions already implemented


He noted that tariff adjustment by the Public Utilities Regulatory Commission (PURC), Publication of the Auditor-General’s Report on COVID-19 Spending, and Onboarding of Ghana Education Trust Fund (GETFund), District Assemblies Common Fund (DACF) and Road Fund on the Ghana integrated financial management information system (GIFMIS) have all been completed.

International and domestic bond markets are shut

Ofori-Atta reminded the legislators that the international and domestic bond markets are shut for the financing of government’s programmes, forcing government to rely on the Treasury Bills and concessional loans as the primary sources of financing for the 2023 fiscal year.

Therefore, he called on Parliament to support the government’s financing requests to ensure a smooth recovery from the economic challenges.

He thanked everyone who tendered and supported the Domestic Debt Exchange programme saying “It is a truly remarkable act of sacrifice in our nation’s history. We thank those who heeded our clarion call and took the selfless, patriotic decision to participate. Your names and deeds will never be forgotten. Your timely support is deeply appreciated,”.


He is confident that the programme government has set out for this year, supported by Parliament, will get Ghana out of the economic crisis that has hit the economy since Covid-19.

Inflation interest and exchange rates to stabilise

He hopes for stability in the exchange rates, inflation and interest rates, bringing businesses and families some respite.

Suspension of payments of interest on foreign debt

Government also announced a suspension of all debt service payments for certain categories of external debt, pending an orderly restructuring.


International bondholders

Ofori-Atta revealed that Ghana initiated discussions with representatives of international bondholders and their Advisors.

According to him, substantive discussions are due to start with them in the weeks to come.

G-20 Debt Treatment initiative

Ghana officially asked its bilateral creditors for a Debt Treatment initiative under the G-20 Common framework.


Negotiations with commercial creditors underway

The Finance minister said the process of negotiations have started in good faith with commercial creditors.

Ofori-Atta stated that two preliminary discussions and exchange of information have started on a good footing with representative committees and advisors.

Creditor Committee to assess Ghana’s request

According to him, the members have indicated their commitment to establish a Creditor Committee to assess Ghana’s request for debt treatment under the Common Framework by end February, 2023.

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IMF assigns resident financial supervision adviser to BoG



Financial adviser, BoG, Newscenta, banking sector supervision, IMF,

The International Monetary Fund (IMF) has assigned a Resident financial sector supervision adviser to the Bank of Ghana (BoG) to provide technical assistance and help build the capacity of the banking supervision function.

The appointment was at the request of Bank of Ghana with full funding from Switzerland’s State Secretariat for Economic Affairs (SECO).

Mr. Leonard Chumo, the Resident Adviser, started his assignment at the Bank of Ghana on February 6, 2023, and was expected to stay for three years.

A statement issued by BoG in Accra said the Adviser’s placement was a continuation of cooperation in this area between the Bank, the IMF and SECO, that started as early as in 2015 and had already seen the assignment of a previous Adviser until 2018.

It said achievements from the past collaborative efforts include the passage of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), the development and issuance of the Corporate Governance Directive 2018, and the Capital Requirement Directive 2018.


Mr Chumo, brings first-hand knowledge of supervisory work from leading central banks as well as previous technical assistance experience in the Western Africa region.

The statement said among others, he would support the implementation of Pillar two and three of the Basel II/ III capital frameworks, as well as strengthen the Risk-Based Supervisory framework at the Bank of Ghana.

The Bank commended the management of SECO for the continued funding of Long-Term Technical Experts from the IMF to the Bank.

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Govt pledges to pay coupons, principals on all maturing bonds  



Coupons, Newscenta, maturing principals, bondholders, payment,

Government has assured all bondholders, including those who self-exempted from the voluntary Domestic Debt Exchange Programme (DDEP) that it will honour all coupon payments and maturing principals when due.

Payment of coupons and principal for bonds that matured since   February 6 to date (herein referred to as ‘Due Bonds’ remain outstanding.

Bondholders want government to make payments not later than Friday, February 17, 2023.

A statement issued by the Finance Ministry indicates that more than 80% bondholders participated in its $137 billion DDEP.

“The DDEP closed on Friday February 10, 2023, with over 80% participation of eligible bonds,” it said.


The Finance Ministry pledged to honour all coupon payments and maturing principals in addition to commitments to further streamline Government’s expenditures.

“We would like to stress that, all Individual bondholders, especially our Senior Citizens, should rest assured that their coupon payments and maturing principals, like all Government bonds, will be honoured in line with Government’s Fiscal commitments.

“The Government would like to reassure all individual bondholders who elected not to participate that your coupon payments and maturing principals, like all Government bonds, will be honoured in line with Government fiscal commitments,” it added.

Government reiterated that the DDEP had been executed to help protect the economy and enhance Ghana’s capacity to service its public debts effectively, as its debt had become unsustainable.

The alternative for not executing the DDEP would have brought grave disorder in the servicing of our national debt and exacerbated the current economic crisis.


It expressed gratitude to bondholders for the overwhelming participation, adding that their support and contributions had gotten Ghana much closer to securing the International Monetary Fund (IMF) programme.

There are fears that those who opt against signing up are not guaranteed market liquidity for the old bonds, because they are likely to become less tradeable on the secondary market compared with the new bonds.

On the other hand, individuals who sign up for the new bonds will have more certainty even in a changing economic landscape.

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