A global political and credit risk insurance analysis published recently has seen Ghana among the world’s 18 most risky countries.
Ghana’s downgrading is as a result of the debt incurred by the country’s only oil refinery, the Tema Oil Refinery (TOR), according to the analysis by Aon Corporation, the Chicago-based insurance brokerage.
Aon’s 17th annual Political and Economic Risk Map for 2010 ranks countries according to levels of perceived political risk, ranging from low risk to “very high” risk.
The following countries are noted as low risk; the United States, Canada and countries in Western Europe.
The eighteen countries that have seen conditions worsen which led to a downgrade are; Algeria, Argentina, El Salvador, Equatorial Guinea, Ghana, Honduras, Kazakhstan, Latvia, Madagascar, Mauritania, Philippines, Puerto Rico, Seychelles, Sudan, United Arab Emirates, Ukraine, Venezuela and Yemen.
Of the 18 countries, four countries have been identified as major downgrades and these are; Lativa, Ghana, Yemen and the Ukraine.
TOR has a debt of $680 million , according to the former governor of the Bank of Ghana, Dr. Paul Acquah. See this story.
The analysis noted that a major issue for underwriters is the risk of governments not paying sovereign debt obligations, and Ghana was cited as a typical example with the TOR debt.
Miles Johnstone, director of Aon’s Political Risk team was quoted as saying, “High-risk countries generally have very little insurance cover available…but it’s not impossible to place cover.”
In Ghana, he said, the state-owned oil refinery defaulted on $600 million in debt. While much of that is internal, he noted, so far $50 million has been paid by insurers for oil import contacts, and notifications of loss are still pending.
Aon has produced the risk map for 17 years, using an analysis by Oxford, England-based consulting firm Oxford Analytica Ltd.
Information is gathered from analysts and insurance underwriters on the dangers of terrorism, war, strikes or riots, the nonpayment of sovereign debt and other perils.
By Emmanuel K. Dogbevi
We should not make much of message. Some of these analysis are sometime not correct. Ghana needs to look after it finances and responsibilities. But we should also remember most of these Western organization that make all these claims. Did not see the fault in their own economy.
In todays world, the western counties have a different measure for economy and Eastern Asian countries have another. Most African economies are more stable than their western counterpacts. It all come down to interpretations.