S&P downgrades Ghana's credit rating from B- to CCC+ - Report.

Standard and Poor's (S&P) Global Ratings.

Standard and Poor's (S&P) Global Ratings, an American credit rating organisation, lowered Ghana's foreign and local currency sovereign ratings from B-/B to CCC+/C on Friday, August 5.

According to MarketWatch.com report, "Reflecting Ghana's limited commercial financing alternatives.", S&P maintains a negative outlook for the nation. S&P say, external and fiscal buffers are limited.

S&P which is one of the 'Big Three' credit-rating agencies, including Moody's Investors Service and Fitch Ratings, in their report stated that the "Covid-19 pandemic and the conflict in Russia have magnified Ghana's fiscal and extemal imbalances.”

“There is also demand for foreign currency that has been driven higher by several factors, including non-resident outflows from domestic government bond markets, dividend payments to foreign investors and higher costs for refined petroleum products." the report added.

Among other things, S&P Global Ratings said that, Ghana has been hampered from accessing the Eurobond market by the local authority's enactment of a law on electronic transactions and legislation tightening exemptions from tax payments, including VAT.

“While these changes could improve the tax take going forward, the situation remains challenging and over the first half of 2022, the fiscal deficit has exceeded the government's ambitious target." S&P Global Ratings stated.

As of February, S&P Global Ratings has confirmed Ghana's ratings, but Moody's had downgraded it to Caa1 with a stable outlook.

After increasing from 76.6 percent in December 2021 to GH393.4 billion in June 2022, the Bank of Ghana estimates that Ghana's public debt would reach 78.3 percent of GDP (GH393.4 billion) by the end of June 2022. Domestic debt was GH190.1 billion (37.8 percent of GDP), while foreign debt totaled GH203.4 billion (37.8 percent of GDP) (40.5 I percent of GDP). IMF authorised a $5918 million facility for Ghana in April 2015 despite Ghana's "high risk of debt distress" status. In order to maintain fiscal discipline, the International Monetary Fund (IMF) established a programme to manage the economy and restrict government expenditure. Ghana said on July 1 that it was contacting the Washington, D.C.-based International Monetary Fund (IMF) about a financial rescue plan.

Since then, an IMF team has met with key stakeholders during a one-week visit to Accra in July 2022, from the 6th to the 13th.

Source: ghananews.hrforum.uk