Ghana’s Finance Minister Ken Ofori-Atta believes its “an awkward time” for sovereign rating agencies to downgrade global economies in the wake of the COVID-19 pandemic, which, he describes as “an unknown enemy”.
“It is in my view that this is a very awkward time for sovereign credit rating downgrading and talks of moral hazard in the face of an unknown attack by an unknown enemy for what is not a blizzard but, at best, a long winter”, he said in his concluding remarks at the just-ended 2020 IMF/World Bank Virtual Spring meeting.
This comes a few days after rating agency Moody’s downgraded Ghana’s economy from positive to negative.
Mr Ofori-Atta also called for a two-year moratorium for repayment of loans by African countries to the Bretton Wood institutions.
He also asked for debt relief for all African countries.
“The need for a two-year or longer standstill given that the nature of this pandemic is not a passing blizzard but truly a long winter, if not a mild ice age. And, as indicated, a more comprehensive debt relief discussion and the US representative, Mr Mackintosh and David, indicated, to begin a dialogue with private sector creditors without coercion”.
Mr Ofori-Atta proposed a three-pronged approach to bringing the world economy back to growth.
First, a recognition that this economic crisis will last much longer and have a greater impact on the developing world.
Secondly, the need for additional capital to quickly address the issues of economic revival and global supply chains and healthcare systems, and thirdly, a new global financial architecture in order to rebuild global growth and institute a new global public good.
“Let us, from here, move rapidly to create an inclusive global forum to rebuild the international financial and economic architecture and a new ability to respond equitably and rapidly to such a catastrophe”, he mentioned.
The Finance Minister also called for a new global economic order to save the world from the economic ravages of COVID-19.
“Fellow Governors, I propose we establish an inclusive team of willing collaborators with the private sector from this meeting to create this new era that will make our future greater than the past. It is, indeed, a break-the-glass moment and we must seize it”.