Policy think tank Danquah Institute (DI) has emphasised that the governing New Patriotic Party’s (NPP’s) performance in governance has always resulted in a better credit rating compared to the opposition National Democratic Congress (NDC).
In a maiden edition of the Institute’s planned monthly media encounter held on Tuesday, February 13, 2023 dubbed: “Analysis of the Ghanaian economy”, DI Head of Research, Dr. Frank Bannor, pointed out that by the end of 2008, when NPP was exiting from government, Standard & Poor had rated the Ghanaian economy B+ with a Stable Outlook.
However, he said under the NDC’s oversight, the country’s credit rating deteriorated to B- with a Negative Outlook by April 2015.
Dr Bannor, who is a Senior Research and Policy Analyst at CDS, maintained that the country was saved from being pushed out of the international bond market when it immediately subscribed to the IMF extended credit facility.
Improved credit rating
He stated that the rating improved in November 2015 to B- with a Stable Outlook. He stressed that under the guidance of the NPP, the credit rating continuously improved to B with Stable Outlook by the end of 2019.
Unfortunately, he said the rating started deteriorating in 2020 until the country was rated CCC+ in 2022, making it impossible to access credit from the international bond market. To this end, he said one of the major reasons why the country had to go to IMF for another extended credit facility programme.
He further explained considering the outlooks as steps, NDC between January 2009 and April 2016, pushed the country 7 steps backwards on the ladder of rating (from B+ with a Stable Outlook to B- with a Negative Outlook).
He noted that even though the outlook improved from negative to stable in November 2015, Ghana was still rated with the grade of B-.
“It was this situation that NPP inherited and managed to push the rating to B with a Stable Outlook (three steps upwards) by the end of 2019. However, the country’s credit rating relapsed to CCC+ with Negative Outlook in 2022. I would like to state on record that while the NPP had one Upgrade in its first term, however, the NDC never had any upgrade in the whole of their 8 years (2009-2016),” he reiterated.
On practical terms, he posited that while the NDC left a deficit of about 6 steps in 8 years, the NPP had recorded a deficit of 3 steps in almost 7 years.
“It is important to understand that a change in Credit Rating Outlook is not equivalent to an Upgrade! We contend that if the NDC’s performance with credit rating was as good as NPP, the country could have avoided the ‘ban’ from the international credit market in 2022!,” he stated.
Other areas
Aside the credit ratings, the Danquah Institute also provided facts that are related to the vision statement emphasizing GDP growth, inflation, exchange rate, debt-to-GDP, fiscal policy, and primary balance.
The Institute stressed that these macroeconomic indicators are key pillars of every economy and they provide the fundamental building blocks that will ensure sustainable development for our dear nation.
“The understanding provided for such issues to enable the Ghanaian listener/viewer who is interested has not been strong and we believe that there are many issues that need more detailed discussion and so we will be coming up with research to further enhance these discussions,” Dr Bannor added.
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