Gov’t takes on Moody’s over ‘desktop downgrade’

The government says it is puzzled by the decision of ratings agency, Moody’s Investors Service, to downgrade Ghana’s credit rating to Caa1 from B3, insisting that the action was based on desktop exercise and not proper evaluation of the country’s deepening credit story.
It also disagreed with Moody’s assertion that the economy and its institutions were deteriorating, given Ghana’s reputation as a beacon of democracy in Africa.

The government has, therefore, asked the general public and the international investor community to ignore the downgrade, which it described as also contradictory, and focus on the blueprint being unveiled to consolidate fiscal gains and bring debt to sustainable levels.

In a press statement responding to Moody’s February 4 downgrade of the country’s creditworthiness, the Ministry of Finance said the action was also contradictory.

“In a clearly contradictory manner, Moody’s justifies the ‘Stable Outlook’ in spite of the downgrade to “Caa1” by acknowledging the government’s strong track record in delivering effective fiscal policies and the maintenance of a variety of funding sources,” it said.

The Ministry of Finance explained that the Lead Analyst on Ghana at Moody’s was ill-equipped with Ghana’s economic situation, having assumed office just this January.

“Prior to the announcement, between January 28 and February 3 2022, Moody’s engaged senior government officials of the Ministry of Finance and the Bank of Ghana on various issues.”

“The Moody’s team was led by the Lead Analyst on Ghana at Moody’s, Ms Lucie Villa, and supervised by Mr Matt Robinson. It is worthy to note that Ms Villa only recently (beginning of Jan 2022) took over as the primary analyst covering Ghana for Moody’s.”

“We are very concerned that Ms Villa may not properly understand and evaluate Ghana’s deepening credit story since obtaining our first credit rating back in 2003. She also has not visited the country since assuming the role and as such, this downgrade at this critical time was based entirely on a desktop exercise, virtual discussions and what we believe to be the omission of critical data provided,” the ministry’s statement read.

It was issued by the Public Affairs Department.


It was in response to Moody’s February 4 statement in which it said the country’s risk profile had worsened as its debt stock soared and interest payments now consumed more than half of domestic revenue.

It said the situation limited the fiscal space for manoeuvring, making Ghana a substantially risky sovereign to lend to or hold its bonds.

Consequently, the agency downgraded the country’s credit worthiness to Caa1 from B3, moving Ghana deeper to the seventh stage of a 10-step scale that rating agencies use to assess the resilience of economies and their ability to meet obligations to their creditors.

It, however, kept the outlook at stable.

COVID-19 situation

In response, the government said Moody’s, just like its counterparts, had failed to consider the peculiarity of the current economic situation.

“The Government of Ghana is, therefore, completely puzzled by the decision to downgrade Ghana’s credit rating to Caa1 despite the series of progressive engagements we had with the team from Moody’s, the quality of the data supplied, as well as the medium-term economic and fiscal focus of the government, underpinned by key fiscal consolidation reforms such as the policy decision to cut expenditure by 20 per cent, as recently announced by the Minister for Finance, Mr Ken Ofori-Atta.”

“Perhaps, this singular action by Moody’s confirms the notion held by many that there is an urgent need for reforms in the conduct of rating agencies given their ownership structure and the ramifications that their actions have on sovereigns, especially in Africa. The call for rating reform, which was loud during the peak of the COVID-19 pandemic, must be revived as a matter of urgency,” the government said.

South Africa

It said the sentiments expressed by the South African Revenue Services Commissioner, Mr Edward Kieswetter, must serve as a guide.

A critic of the actions of the rating agencies, Mr Kieswetter, had said that: “While we understand the underlying factors that the rating agencies point out, we think that during such a time of crisis, where the whole world is recalibrating and redefining its economic status, for any downgrades to be issued during this time is like kicking us when we are down.”

The Ministry of Finance said such a comment must guide rating agencies in the unprecedented global difficulties facing economies, big and small.

“We shall actively continue to support the global outcry against this leviathan,” it added.


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