Ghana hits Fitch for doubting its deficit-reduction plan

Ghana's finance ministry criticised the Fitch ratings agency on Thursday for saying a deficit-reduction plan outlined in last week's annual budget was not aggressive enough and risked missing its target.

Ghana President

   Fitch downgraded Ghana's sovereign rating on Oct. 17 to B from B+ over concern the country was not doing enough to tackle a budget deficit that surged to 11.8 percent of gross domestic product in 2012.
   Ensuring macroeconomic stability is vital for President John Mahama's government as it seeks to bolster the West African country's reputation as one of the continent's most dynamic economies. Ghana has outlined a multi-year plan to reduce the deficit to 6 percent but acknowledges it is likely to overshoot its first target, which was to reach 9 percent in 2013.
   "We disagree with Fitch Rating's position that the consolidation measures announced in the budget will not effectively address the Ghana fiscal challenges experienced in the past two years," a finance ministry statement said.
   "The view by Fitch Ratings that Ghana's credit-worthiness has been eroded is questionable. Ghana does not have any debt- servicing problems. All debts are honoured whenever they fall due," the statement said.
   A shortfall in non-oil imports and a domestic energy crisis were the main reasons Ghana's finances were expected to slip in 2013, the government statement said. It added that medium-term Ghana's prospects for fiscal stability were good.
   Fitch's statement on Monday said it did not think the budget plan to reduce the deficit to 8.5 percent in 2014 would effectively address the deterioration in government finances over the past two years.
   Ghana produces gold, cocoa and oil, but Fitch also cast doubt on the government's ability to expand its revenue base. The agency noted that Finance Minister Seth Terkper's budget pushed back by one year to 2016 the date for consolidating the deficit to 6 percent.