Ghana's credit rating under attack
E. Ablorh-Odjidja, Ghanadot

Accra, Feb 4, Ghanadot - In a haste to build its reputation as effective administrator after the NPP government, the NDC administration came out with the news that Ghana was broke. This came after the World Bank representative in Ghana gave a lukewarm report on the state of the country's economy.

Shortly after these events, the NDC and the World Bank salvos, the Finance Minister designate of the NDC administration, Dr. Kwabena Duffuor, was to make a contradictory statement. He said Ghana was not broke after all.

Apparently, the confusion in the reports on the state of the Ghanaian economy has began to show on the world market.

The Daily Guide, a Ghanaian paper, reported that the London based credit rating agency, Fitch, "has warned that Ghana's widening budget deficit would eventually threaten its credit rating after its new leadership said the country was effectively broke."

The Daily Guide went on to say that Fitch rated Ghana as a ” B+ with a stable outlook." That was in 2008 and before the "country broke" declaration was made.

By 2008, Ghana was enjoying a stable reputation in the credit and trade centers of the world. The country had launched successfully a $750 million Eurobond on account of its reputation as one of Africa's most stable new markets.

That perception about Ghana's economy is now threatened or may soon be news of the past.

"I think it is mainly political rhetoric” said Paul Rawkins, a senior director of the Fitch team, to Reuters, "but obviously senior politicians talking about being broke is not particular good for credit worthiness."

Standard & Poor, another credit agency which still rates Ghana at B+, has a slightly different outlook on the matter.

A senior official from that agency said about Ghana's credit standing that "it was too soon to worry."

Standard & Poor admits that it was clear from the start of 2008 "that the year was going to end with a much larger deficit than the budgeted 4% of the GDP."

Government officials of the past NPP administration, have admitted to the rise in the deficit, but they attributed the blame to rise in cost of goods. Petroleum, they said, rose from around $60.00 a barrel to $148.00 last year and that alone should account for the increase in the budget deficit.

Despite the energy crisis, these officials said, the economy still recorded 6.4% growth in 2008. They noted that in 2000 the growth stood at 3.7%.

This year, 2009, has a different outlook based on projections by the government statistician, Dr. Grace Badiako. Already the economy has started slowing down. The manufacturing sector, Dr. Bediako said, started slowing down from the last quarter of last year because of the global credit crunch.

Even officials from the NPP regime admit that there is something to worry about because of the present state of the global economy. Many nations of the world; the US, Britain, Japan and China, the world's economic superpowers, have not been spared by the trenchant fiscal crunch within the world’s markets.

However, these Ghanaian officials are optimistic about the country’s future. They point to the silver lining within the dark economic cloud - oil, a commodity which will soon be pouring out of pipelines by 2010 from Ghana's new oil well at Cape Three Point.

Paul Rawkins of Fitch agrees that while the oil prospect may be true, it also must must carry a warning. The prospect of oil, he said, "should not allow the country's new rulers to be complacent."

He said if the deficit should climb up, Ghanaians "will lose all the benefits they got from the HIPC debt relief."

Ghanadot