Fitch Upgrade Does Not Reflect Public Relief -Prof.  Bokpin

Professor of Finance and Economics at the University of Ghana, Prof. Godfred Bokpin, has cautioned that Ghana’s recent credit rating upgrade by Fitch Ratings is being driven largely by painful austerity measures rather than direct economic relief for ordinary citizens.

His comments follow Fitch Ratings’ decision to upgrade Ghana’s Long-Term Foreign-Currency Issuer Default Rating from “B-” to “B” with a Positive Outlook, citing improvements in fiscal discipline, economic growth, currency appreciation and increased international reserves.

According to Fitch, Ghana’s public debt is expected to decline further to 46% of Gross Domestic Product by 2027, placing the country below the average debt level for economies within the same rating category.

 Prof. Bokpin said the upgrade was not surprising because government policies over the past year had been deliberately structured to improve Ghana’s standing among international investors and credit rating agencies.

He explained that the country had made significant progress on key rating indicators as far back as October last year, particularly within the framework used by Fitch in assessing economies.

Prof. Bokpin stated that the government’s fiscal and monetary policies have largely focused on reducing expenditure and improving macroeconomic indicators in order to restore confidence in the economy.

According to him, unlike previous administrations that relied more on revenue mobilisation while maintaining spending levels, the current government has adopted what he described as expenditure-based fiscal consolidation.

He warned that although the strategy may produce attractive economic figures and improve investor confidence in the short term, it also comes with painful sacrifices for citizens and critical sectors of the economy.

“When you switch to expenditure-based fiscal consolidation, in the immediate, your books may look good, and the numbers may look very appealing, but you have sacrificed so much,” he stated.

Prof. Bokpin further argued that continued cuts in government spending on infrastructure and other productive sectors could negatively affect economic growth in the medium to long term.

Fitch Ratings attributed Ghana’s improved outlook to a sharp decline in public debt, stronger fiscal discipline, appreciation of the cedi and rising international reserves.

The agency also noted that Ghana’s improving macroeconomic indicators continue to strengthen investor confidence despite ongoing global economic uncertainty.