Global Ratings agency S&P has lowered the sovereign rating of Ghana to âselective defaultâ from CC, a day after the country announced it would suspend its external debt payments.
S&P Ratings said it views the moratorium as a âselective defaultâ and did not issue any outlook.
âWe expect to lower our ratings on Ghanaâs foreign currency issues to âDâ (default) if the government fails to make the next scheduled coupon payment on its commercial foreign currency debt,â the rating agency said.
Ghana on Monday suspended payments on most of its external debt, effectively defaulting as the country struggles to plug its cavernous balance of payments deficit.
The Finance Minister, Ken Ofori-Atta, said Ghana will not service debts including its Eurobonds, commercial loans and most bilateral loans, calling the decision an âinterim emergency measureâ, while some bondholders criticised a lack of clarity in the decision.
The government âstands ready to engage in discussions with all of its external creditors to make Ghanaâs debt sustainableâ, the finance ministry said.
The suspension of debt payments reflects the parlous state of the economy, which led the government last week to reach a $3-billion staff-level agreement with the International Monetary Fund (IMF).
Ghana had already announced a domestic debt exchange programme and said that an external restructuring was being negotiated with creditors.
The IMF has said a comprehensive debt restructuring is a condition of its support.
The country has been struggling to refinance its debt since the start of the year after downgrades by multiple credit rating agencies on concerns it would not be able to issue new Eurobonds.