"BoG becoming a propaganda tool of Government

" BoG becoming a propaganda tool of Government - Prof Gatsi \r\n\r\nDean of the Business School of the University of Cape Coast (UCC), Professor John Gatsi, has labeled the country's Central Bank as a \"tool of propaganda\" being used by the current government.\r\n\r\nProf. Gatsi's assertion is premised on the Central Bank's blame game and continuous association of the country's loss of access to the international capital market to the successive downgrades of Ghana's creditworthiness by the world\u2019s three most popular credit rating agencies \u2013 Moody\u2019s, Fitch Ratings and S&P.\r\n\r\nProf. Gatsi in a Facebook post which he titled Credit rating and BoG position disturbing, averred the Bank of Ghana is creating a false impression about credit rating through its continuous blame of Moody\u2019s, Fitch Ratings and S&P for the country's loss of capital market access.\r\n \r\n \"Credit rating is basic to assessing the creditworthiness of a company and a sovereign country to signal to creditors what to expect when they lend. Broadly, to come up with a rating for a country means an assessment of the fiscal performance including debt management has been conducted. The rating thus reflects the management of the economy. Credit rating agencies like Audit firms do make mistakes and should be challenged with data and methodology. In the absence of an objective challenge, the institution which is required to be professional and independent is gradually becoming a propaganda tool of government. \r\n \r\n \r\n \r\n \"It is NOT Credit rating agencies that took Ghana from the international capital market. It is poor management of resources and inordinate desire for debts. Knowing that to return to the international capital market requires good rating, how can an institution leave its core mandate to be creating false impression about credit rating? Even if Ghana establishes its own credit rating agency, no creditor will be bound to lend to the country if the rating is not quality. Remember, we have more than 150 rating agencies in the world but the three- S&P, Moody and Fitch still dominate. BoG is doing the best under the circumstances and focusing on the mandate will help all of us,\" he argued. \r\n \r\nIn an earlier interview, the Governor of the Bank of Ghana (BoG), Dr Ernest Addison, described as a \u201crude shock\u201d the downgrade of Ghana\u2019s creditworthiness by Moody\u2019s, Fitch Ratings and S&P.\r\n\r\nMaking the assertion on the sidelines of the ECCB 40th anniversary and Central Banking Autumn meetings in Saint Kitts and Nevis, the Governor noted the downgrades immediately led to a loss of market access for the country.\r\n\r\n \u201cAt the end of 2021, inflation was at 12.7%. We had started tightening monetary policy rates in 2021, far ahead of the US Fed \u2013 and at a time when a lot of other central banks were still in accommodative mode and not tightening policy. We raised the policy rate by 100 basis points in November of 2021. But in February 2022, we had a rude shock when Moody\u2019s followed by Fitch and S&P downgraded Ghana\u2019s creditworthiness. \r\n\r\n \u201cThat immediately led to a loss of market access, and it became clear to everybody who knew the Ghanaian economic indicators that this was going to be a difficult period. As a result, the central bank had to provide some accommodation. But, even then, we managed it quite well. For the first three months of the year, the access levels were not significant. \r\n\r\n \u201cBy the second quarter, however, things began to change. The currency took a severe hit because of significant portfolio outflows and heightened speculation about an IMF programme. Because of the strong stance of not going to the IMF, we began to lose reserves and government spending was far in excess of its revenues, including debt-service payments \u2013 we had to continue to service debt even though we had lost access to the market. This is why the central bank lost close to $3 billion reserves in 2022,\" the Governor remarked.\r\n\r\nGhana, given the prevailing economic crisis with inflation shooting up to 54% and the cedi losing around half of its value within a year\u00a0coupled with impending default on coupon payments, saw the three rating agencies downgrade Ghana\u2019s bonds to junk status and assigning a \u201crestrictive default\u201d rating to the country\u2019s creditworthiness.\r\n\r\nThe country's creditworthiness has now been upgraded to \"CCC\" rating status."

"BoG becoming a propaganda tool of Government

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