Finance Minister, Ken Ofori-Atta
Fitch and Moody’s downgrade Ghana’s credit score
Ghana’s economy rated as ‘Very High Credit Risk’ – Moody’s
Ghana’s public debt reaches GH¢344.5 billion as of November 2021
Ghana’s creditworthiness score has been maintained at ‘B’ negative and ‘B’ by ratings agency Standards and Poor’s Global Ratings (S&P).
According to S&P, the latest credit score is based on solid growth prospects for Ghana in the short to medium-term.
In addition, S&P in a statement issued on February 4, 2022, maintained Ghana’s outlook as stable with the view of government measures in the 2022 budget put in place to control its surging debt growth which is expected to yield results.
“Our ratings are supported by Ghana’s solid growth prospects – with real GDP growth projected to average close to five percent per year over 2022 to 2025 – as well as its relatively transparent and responsive political institutions and largely market-oriented economy.”
“Since 2005, per capita GDP in dollar terms has more than doubled, reaching a still low us$2,373 in 2021, with growth per person over the past 15 years averaging 3.5 percent.” S&P explained.
The agency further acknowledged, “Ghana is one of the most open economies in Africa, with exports equal to one-third of Gross Domestic Product”
Adding that two of the largest sectors in the country were mining and hydrocarbons which account for 70 percent of all exports.
“Because of Ghana’s relatively diversified commodity base of gold, oil, and cocoa, its terms of trade have remained fairly stable, with a 10-year average standard deviation of 3.4 percent. We expect these offsetting trends could continue over the medium term,” it added.
Meanwhile, S&P however cautions that it would not hesitate to revise its current rating score in the next six to 12 months if the country’s economic situation should change.
Ghana’s latest ratings by S&P means its debt are classified as highly speculative in the eyes of global investors with regard to long and short-term foreign and local currency sovereign.
Already, Fitch Ratings earlier in January this year downgraded Ghana’s score to ‘B’ negative from ‘B’ with a negative outlook.
This was recently followed by Moody’s Investors Services which downgraded Ghana’s score from ‘B’ to ‘Caa1’ with a stable outlook.