Former Chief Executive Officer (CEO) of Stanbic Bank, Alhassan Andani has underscored the need for the government to act quickly to restore the country’s lost creditworthiness and reputation on the international capital market.
An economic crunch that the government attributes to the COVID-19 pandemic and further exacerbated by the Russia-Ukraine crisis caused the country to default on honouring its debt obligation overseas. The dire situation necessitated a restructuring of the country’s external and local debt to create fiscal space.
Given the failure of the country to honour its debts, it was locked out of the international capital market signifying that the country is not eligible to borrow from external creditors. In the midst of this, its credit rating was downgraded as external and local bondholders endured a haircut. This, many analysts believe has damaged the country’s creditworthiness and reputation on both the international and local capital market.
Although the government has initiated programmes to accelerate the economy’s recovery, the former CEO of Stanbic Bank is of the view that the recovery is largely dependent on how quickly the country restores its creditworthiness and reputation.
The economist is convinced that the lack of access to the global capital markets could have far-reaching consequences if not swiftly addressed.
“We have to have that mature conversation. We have to restore as quickly as we can, our creditworthiness, and our reputation as a country. Whether in the short term, medium or long term, our biggest problem is to re-establish as quickly as possible our creditworthiness,” Alhassan Andani has indicated.
Among a number of measures, Mr. Andani is proposing a mature and open conversation with the domestic bondholders who were the most affected by the debt exchange program. He is convinced that regaining their confidence will play a crucial role in this process of recovery.
He noted that, “given that the domestic bondholders were most significant, the government must have matured conversations with these debt holders and let’s see how we can immediately wash up and freshen up ourselves and hopefully our external partners can have a look at us.”
Despite the challenges, Andani noted that Ghana’s strategic position in the global economy could be leveraged to rebuild its reputation. He pointed out that the country’s bilateral relationships, which were not significantly harmed, offer a potential avenue for support during this difficult period.
“Our bilaterals were not that badly hurt. 5 billion was not that high. Ghana is a very strategic country and if we are able to manage the strategic relationships, we will probably can get the bilaterals to hold our hand over what can be a very difficult medium to long-term private capital market journey,” he explained.
