By Franklin ASARE-DONKOH
Ghana’s President, Nana Addo Dankwa Akufo-Addo has lashed out at international credit rating agencies across the globe, describing its ratings as reckless.
According to President Akufo-Addo, the consistent downgrades of Ghana’s economy by credit rating agencies have contributed to the country’s current economic woes.
“Reckless downgrades” are not in the best interests of developing countries like Ghana. He cried.
Addressing the gathering at the 30th-anniversary celebration of the African Export-Import Bank in Accra, President Akufo-Addo explained that such ratings put undue pressure on African economies, especially Ghana.
Stressing the impacts of the ratings, the Ghanaian president maintained further that being “the AU champion for African financial institutions and leader of a country that recently had to deal with one of the most difficult periods in his post-independent history, difficulties that were exacerbated by the reckless behaviour of rating agencies that engaged in pro-cyclical downgrades that shut Ghana out of the capital market and turned a liquidity crisis into a solvency crisis.”
President Akufo-Addo also highlighted the risks and costs associated with African nations relying on foreign capital markets.
The Ghanaian president stated that it is important for Africans to build their indigenous financial institutions to achieve economic growth through domestic resource mobilization and private sector development.
He explained the drawbacks of depending on foreign capital, citing financial leakages, high borrowing rates, and interest payments as key issues.
According to him, such reliance undermines the growth of domestic financial institutions and hampers the development of African economies.
He ended his speech by proposing some interventions that African leaders should embrace to overcome the current economic challenges.
President Akufo-Addo emphasized the importance of capitalization and effective coordination with the African Union.
“Unless we have strong financial institutions, we are not going to develop. We have learnt over the decades that relying on foreign capital is both risky and costly. It has resulted in huge financial leakages to a high cost of default-driven borrowing rates and interest payments and undermines the growth of our financial institution’s domestic resource mobilization and private sector development.”