![](\"https:\/\/cdn.ghanaweb.com\/imagelib\/pics\/231\/23186543.jpg\")
Source: Moody’s<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"
<\/p>\n
Ghana\u2019s economy rated in Very High Credit Risk<\/b><\/p>\n
Fitch downgrades Ghana\u2019s economy to \u2018B-\u2018<\/p>\n
Finance Ministry rejects Moody\u2019s latest ratings<\/p>\n
Ghana\u2019s economy has been downgraded again by another international rating agency, Moody\u2019s Investor Services.<\/p>\n
This follows a previous downgrade by Fitch in January this year, downgrading Ghana\u2019s economy to \u2018B-\u2019 from an earlier \u2018B\u2019. <\/p>\n
Fitch said Ghana had lost access to international capital markets which could hamper the country\u2019s ability to meet its medium-term financing needs. <\/p>\n
However, the latest downgrade released by Moody’s on Friday, February 4, 2022, rated Ghana\u2019s long-term issuer and senior unsecured debt ratings from B3 to Caa1.<\/p>\n
Moody\u2019s cited the country’s downgrade was influenced by liquidity and debt challenges as well as weak revenue generation constraints.<\/p>\n
The agency also noted that Ghana’s government has not been able to afford itself the opportunity to be flexible with its expenditure.<\/p>\n
But what does the latest rating by Moody\u2019s mean for Ghana\u2019s economy? <\/p>\n
GhanaWeb in this article zooms in on the rating scale as provided by Moody\u2019s:<\/b> <\/p>\n
Credit risks are calculated based on the borrower’s overall ability to repay a loan per the original terms of the loan\u2019s agreement. A number of factors are however looked at to determine the credit risk and worthiness of the borrower. <\/p>\n
Lenders often look at the five Cs which are; credit history, capacity to repay, capital access, the loan’s conditions, and associated collateral. <\/p>\n
For a country\u2019s economy to be fully stable, it must attain the \u2018Lowest Level of Credit Risk\u2019 which according to Moody\u2019s places it on the \u2018Aaa\u2019 rating. <\/p>\n
This means financial obligations rated Aaa are judged to be of the highest quality, with minimal credit risk in honouring financial obligations.<\/p>\n
Countries in the \u2018Very Low Credit Risk\u2019 section which rates; Aa1, Aa2 and Aa3 mean they often honour financial obligations and are judged to be of high quality. <\/p>\n
In the \u2018Low Credit Risk\u2019 section, Moody\u2019s scale rates a country\u2019s economy at; A1, A2 and A3 while that of \u2018Moderate Credit Risk\u2019 is; Baa1, Baa2 and Baa3. <\/p>\n
This simply means financial obligations are considered upper-medium grade while the latter\u2019s rating ‘Baa1’ is subject to moderate credit risk in making debt payments. <\/p>\n
Moodys\u2019 however considers them [‘Baa1’] as medium grade and may possess certain speculative characteristics to clear debts. <\/p>\n
Meanwhile, Moody\u2019s also places a country\u2019s with \u2018Substantial Credit Risk\u2019 in Ba1, Ba2 and Ba3 meaning, financial obligations have speculative elements to clear debts.<\/p>\n
Additionally, ‘High Credit Risk’ nations are given B1, B2 and B3 ratings meaning they are considered rather speculative in honouring financial obligations. <\/p>\n
Finally, for nations heading toward economic distress, Moody\u2019s places them in the ‘Very High Credit Risk’ section and subsequently rates them as Caa1, Caa2, Caa3. <\/p>\n
This means they are judged to be of poor standing in honouring debt payments or financial obligations. <\/p>\n
Source: Moody’s<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"
Ghana\u2019s economy rated in Very High Credit Risk Fitch downgrades Ghana\u2019s economy to \u2018B-\u2018 Finance Ministry rejects Moody\u2019s latest ratings Ghana\u2019s economy has been downgraded again by another international rating agency, Moody\u2019s Investor Services. This follows a previous downgrade by Fitch in January this year, downgrading Ghana\u2019s economy to \u2018B-\u2019 from an earlier \u2018B\u2019. Fitch […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[72],"tags":[4335,4478,250,3091,4428,1824],"class_list":["post-980600","post","type-post","status-publish","format-standard","category-business","tag-caa1","tag-explainer","tag-ghanas","tag-means","tag-moodys","tag-rating"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/980600","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=980600"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/980600\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=980600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=980600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=980600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}