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Ghana Now A Complete Junk Economy, Fitch Downgrades Country From CCC to CC Credit Rating

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Ghana Now A Complete Junk Economy, Fitch Downgrades Country From CCC to CC Credit Rating

FitchRatings has downgraded Ghana’s Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) to ‘CC’, from ‘CCC’.

Fitch typically does not assign Outlooks to issuers with a rating of ‘CCC’ or below.
A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS
Increased Probability of Debt Restructuring: The downgrade reflects the increased likelihood that Ghana will pursue a debt restructuring given mounting financing stress, with surging interest costs on domestic debt and a prolonged lack of access to Eurobond markets.

There is a high likelihood that the IMF support programme currently being negotiated will require some form of debt treatment due to the climbing interest costs and structurally low revenue as a percentage of GDP.

We believe this will be in the form of a debt exchange and will qualify as a distressed debt exchange under our criteria. The government has not confirmed or denied press reports that Ghana is preparing to negotiate a restructuring. Interest costs on external debt are lower than for domestic debt and near-term external debt amortisations appear manageable.

However, we believe there could be an incentive to spread a debt restructuring burden across domestic and external creditors and therefore do not have a strong basis to differentiate between Foreign- and Local-Currency ratings at this time.

High Debt Service, Financing Constrained: Interest costs reached 47.5% of revenue in 2021 and 54% in 1H22. Interest payments on domestic debt comprise around 75% of total interest costs. This reflects high yields on domestic debt, which have climbed following a 34% yoy spike in inflation as at August 2022 and monetary tightening, with the Bank of Ghana hiking its policy rate to 22.0%, from 14.5% in February. Yields on the 91-day treasury bill reached 27.0% in August, up from 12.5% in August 2021, and 10-year yields have spiked to above 35% in September, from around 20% in 1Q22.

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Limited Access to External Financing: We expect external financing access to stay limited until at least an IMF programme is agreed, as Ghana is likely to remain locked out of Eurobond markets, which had been the country’s regular source of external financing. The government obtained a USD750 million term loan from African Export-Import Bank (BBB/Stable this year and USD250 million in syndicated loans from global commercial banks. It can also use its sinking fund. We estimate Ghana faces around USD3 billion of external debt service costs in 2023, including amortisation and interest.

Continued Reserve Pressure: We expect persistent downward reserve pressure in the absence of an IMF programme. Official reserve assets fell to USD7.3 billion in June, from USD9.8 billion in 2021 and gross international reserves, excluding oil funds and encumbered assets, totalled USD7.1 billion in March, the latest figure available. The exchange rate has weakened by 40% year-to-date against the US dollar, reaching GHC10:USD1 in September, potentially made worse by the drop in non-resident investment in local-currency debt. Non-resident holdings were GHC23.1 billion at end-August, or 4% of Fitch-forecast 2022 GDP.

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IMF Programme Pending: The government reversed its long-standing position against seeking IMF support in July 2022 and we believe a deal with the IMF is likely within the next six months. Ghana has indicated it could request USD2 billion-3 billion and the programme could unlock budget support from other official lenders. However, we believe a restructuring will be deemed necessary, with local-currency debt treatment potentially included prior to IMF approval, as the IMF is unable to provide financing where it assesses a country’s debt to be unsustainable.

The most recent IMF debt sustainability analysis, conducted in 2021, found Ghana at a high risk of debt distress and vulnerable to shock to market access and high debt servicing costs. Interest costs have risen substantially since then.
Limited Space for Fiscal Consolidation: We expect high interest costs and low revenue to impede fiscal consolidation. The medium-term fiscal framework in the 2022 budget envisaged narrowing the deficit to below the 5% of GDP ceiling by 2024, based on the expiry of pandemic-related expenditure and higher domestic revenue, driven by new taxes, including an electronic transaction levy. However, implementation delays led to lower revenue and a larger nominal deficit in 1H22 relative to budget forecasts. The government’s slim majority in parliament could frustrate attempts to raise tax rates or implement new taxes.

Partially Guaranteed Note Could Be Excluded: We affirmed the rating on Ghana’s partially guaranteed note backed by the World Bank’s International Development Association as the note may be excluded from a debt restructuring even if other Eurobonds are included.

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ESG – Governance: Ghana has an ESG Relevance Score (RS) of ‘5[+]’ for both Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. Theses scores reflect the high weight World Bank Governance Indicators (WBGIs) have in our proprietary Sovereign Rating Model. Ghana has a medium WBGI ranking at the 53rd percentile, reflecting a recent record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a moderate level of corruption.

Ghana has an ESG Relevance Score of ‘5’ for Creditor Rights, as willingness to service and repay debt is relevant to the rating and is a rating driver for Ghana, as for all sovereigns Ghana’s restructuring of public debt in 2006 has a negative impact on the credit profile.

Source: www.GhanaCNN.com

 

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Individuals Without Ghana Card Exempted From Ongoing SIM Deactivation – NCA

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Individuals Without Ghana Card Exempted From Ongoing SIM Deactivation – NCA

The National Communications Authority (NCA) has said individuals yet to obtain their Ghana Card will not be affected by the ongoing SIM deactivation.

The Ghana Chamber of Telecommunication Wednesday announced that subscribers who have failed to complete the biometric stage of registration will have some services disconnected.

The services to be blocked are; voice, data (Mobile, phones, mifis, other data providing devices), SMS (incoming and outgoing) USSD, mobile money services and emergency services.

However, the Director for Consumer & Corporate Affairs at the NCA, Nana Defie Badu noted that people who are yet to receive their Ghana Card will be exempted.

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“For those who did not have their Ghana cards and have not been able to register, those people will be exempt from any punitive measures pending the NIA giving them their Ghana card,” she disclosed on the Joy News’ AM Show on Thursday.

She explained further that her outfit was opened to help address the concerns of the general public and their inability to register their SIM cards.

“We acknowledge that there are some people who actually did the stage where they actually linked the sim to the Ghana card but unfortunately, after doing that their Ghana card were either lost, damaged or through no fault of theirs, they could not proceed to do stage two.

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“So, for these people, we have actually asked that they should engage the NCA by calling our toll-free number. After we do an investigation and verify the issue, these people will also be put on the exclusion list pending them getting their Ghana cards reissued to them,” she told the host.

Meanwhile, AirtelTigo has announced that all SIM cards that are not fully registered on its network as of November 30 2022, will be blocked from accessing all services.

In effect, all partially registered SIM cards i.e, customers who have successfully linked their SIM cards to their Ghana Card but have not done biometric capture will be blocked from making and receiving calls, accessing the internet & mobile money services, sending & receiving SMS, amongst others.

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Source: www.GhanaCNN.com

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We’II Not Reduce Transport Fares Despite The Reduction In Fuel Prices – Drivers

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The True Drivers Union has asked Ghanaians who have asked commercial drivers to reduce transportation fares as a result of lower fuel prices to stop.

The Union has stated that it will not lower transportation fares.

The True Drivers Union’s Public Relations Officer, Yaw Barimah, stated that there is no justification for such a reduction.

He told Nyankonton Mu Nsem on Rainbow Radio 87.5Fm that drivers have not even considered such a suggestion from Ghanaians.

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He stated that the current transportation fares would remain unchanged.

“We are aware that the cost of fuel has decreased. We would desire to reduce transportation fares, but we are not prepared to do so. We will not even lower fares by one pesewa. There has been no change. As a result, we are unwilling to lower transportation fares.”

“If a thief steals from you and you chase him down and he gives you back some of what he stole from you, do you celebrate and clap for him?” he asked.

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He claimed that the cost of fuel had risen above normal levels in the past, as had the cost of spare parts, so why should we reduce transportation fares?



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Hopeson Adorye Recounts How He Was Sacked From National Security

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A one-time parliamentary aspirant of the New Patriotic Party (NPP) for Kpone Katamanso, Hopeson Adorye, has refuted news publications that his removal from the National Security Secretariat was because he was not supposed to be working there after he was fired in 2017.

Hopeson Adorye

Speaking in an Okay FM interview, Hopeson Adorye said that the sack letter he received was dated November 17, 2022.

Adorye, who was previously the Deputy National Security Coordinator in Charge of Airports, added that the reasons for his sacking were not stated in the letter because it was President Nana Addo Dankwa Akufo-Addo who ordered his dismissal.

“The news publication is wrong. Why will someone be sacked and leave his post after 4 years? What happened was that in 2017, I had to leave my post at the airport and go back to the ‘blue gate’ because the security at the VIP section of the airport, which the National Security was in charge of, was being taken over by the Foreign Affairs Ministry. I was never sacked; what ‘The Herald’ is saying is false,” he explained in Twi.

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“How can one person be sacked from the same job twice? Tomorrow will be exactly two weeks since I received the letter indicating my appointment had been terminated with immediate effect. The letter was dated 17th November 2022 and I received the letter on 21st November, a day after my birthday,” he added.

He added that many elders of the NPP have advised him not to talk about the circumstances surrounding his dismissal, and he will for now heed their advice.
Hopeson Adorye had previously announced on live radio this week that he had been fired from his government job.

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He said during a discussion on Oman FM’s Boiling Point programme, on which he is a regular guest, that he had been fired purposefully because of his support for Alan Kyerematen.

Adorye is a vocal supporter of the Trade and Industry Minister in respect of the minister’s rumoured bid to lead the NPP as flagbearer when elections take place next year.

“God will cater for us; we will eat, Uncle (referring to the show host); God has got us. How we toiled in opposition for Akufo-Addo to come to power, we will do same for Alan Kwadwo Kyerematen to come.

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“I’m not a zombie, uncle, I was told that my support is not towards a particular camp, so I should be dismissed. I have been dismissed. ‘Your appointment has been terminated with immediate effect.’ That is why I am stressing that God will cater for us; we will never die,” he stressed.

Watch the interview below:

Source: Ghanaweb.com



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