The World Bank has assured Ghana that it is liaising with credit rating agencies not to review the oil producing West African country for taking advantage of the provisions provided by the Bretton Woods institutions to support the economy in the wake of the coronavirus outbreak.
The Country Director of the World Bank, Pierre Frank Laporte told Alfred Ocansey on the Sunrise morning show on 3FM 92.7 Thursday, May 28, the benefits of the provisions are huge and so Ghana should be confident to have a full share of them.
He explained that finance ministers in Africa have raised concerns to the effect that these rating agencies are likely to put them on their assessment board for taking advantage of the provisions made by the World Bank and other institutions including the International Monetary Fund (IMF) to support their economies in the midst of the pandemic.
In March this year, African finance ministers called for a $100 billion stimulus package aside a request for the suspension of debt service payments.
They held a virtual conference to discuss how to deal with the social and economic impacts of the pandemic on African nations.
This was to help the continent combat the impact of the coronavirus on the economy
Accordingly, the World Bank, International Monetary Fund (IMF), African Development Bank (AfDB) and other regional institutions allowed the countries to tap into existing facilities.
Some $44 billion would come from not servicing debt.
Mr Laporte said : “When you don’t pay your debt, in the future the banks will know that this guy doesn’t pay debts. What is happening is that one credit rating agency has already put a couple of countries under review by the fact that they applied for the debt services suspension.
“Some countries are saying if I am going to apply for this initiative it will benefit me. But on the other hand, if I am going to be put under watch then I will have to think twice.
“This is something that internally we are working on. The bank is consulting with the credit rating agencies.
“For instance, Ethiopia was put under watch by a specific credit rating agency and this is causing a lot of uneasy for the finance ministers in Africa especially like Ghana who go on the market to raise revenue.
“Public resources that the World Bank and the IMF give are not always sufficient so countries like Ghana who are better placed often go to the market to raise additional resources for its development.
“Ghana is one of the countries that is concerned that by going to this initiative it might be put on the watch. But at this point in time, I will say the bank is still encouraging Ghana to work with us and we will work with the credit rating agencies because the benefits of the suspension is huge”
He further said the global finance firm will undertake an assessment of the Covid-19 situation in December to ascertain whether or not the pandemic is declining before a decision is taken to extend the debt suspension for countries.
He explained that the debt suspension will be extended if the Covid-19 situation is getting worse by the deadline period of December, 2020.
“Between now and December, countries who qualified for this initiative are expected to request formally through bilateral [agreement] to have a suspension in their debt service until December.
“And after December the processes and initiatives will be reviewed. We will know the impact and how things are at that point in time.
“We know the impact because how of much debt in principle will be postponed or suspended. We will look at whether we have been able to bring it under control, have things resumed normally? If this is not the case it is very likely [the suspension will be extended]. Some ministers are saying to us that December is not just enough.
“It has been made very clear by the bilateral and ourselves that we are prepared to go beyond that. By December in the first cut-off period, the situation will be assessed. If need be then we will extend the period again.”