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Moody’s downgrade is a signal that investors must exercise patience – Prof. Peprah

Associate Professor of Finance at Andrews University, Professor Williams Peprah, has urged Ghanaian investors to relax and wait for the economy to rebound instead of disinvesting now.

According to him, Ghana’s prevailing harsh economic situation is not the best time to disinvest due to the implementation of the mark-to-market policy on investments by banks.

He explained that while disinvesting now may lead to huge losses, waiting for the market to rebound may prove most profitable.

Speaking on JoyNews’ PM Express, he said, “Now that the downgrade has also come, it is a signal to all investors that have the patience and wait. If you really don’t understand investment the downgrade is telling you ‘don’t rush, have the patience and wait’.

“Because in finance or in economics it’s a cycle, today it is down, [tomorrow] it will come up. It depends on the timing so exiting point is very important when it comes to investment. So I’m sure probably those who don’t have financial literacy advice, don’t rush, just have the patience, the economy itself will slow down no matter how it is. If Jesus Christ does not come, the system itself will slow down.”

His suggestion is in reaction to Moody’s downgrading the Government of Ghana’s long-term issuer ratings to Ca from Caa2 or further junk status and changed the outlook to stable.

This concludes the review for downgrade that was initiated on September 30, 2022.

“The Ca rating reflects Moody’s expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currencies debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 2022″, a statement published on its website said..

The statement pointed out that “given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability”.

Source: Ghana News

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