In a recent announcement, Moody’s Investors Service, a credit rating agency has upgraded Ghana’s local currency ratings from Ca to Caa3 with a stable outlook
The rating agency cited the country’s improved external position and debt management framework as the key factors behind the upgrade.
Moody’s noted that Ghana’s external position has strengthened due to higher export earnings and increased foreign direct investment. The country’s current account deficit has also narrowed, thanks to lower imports and higher export revenues. These positive developments have boosted Ghana’s foreign exchange reserves and reduced its external vulnerability.
Extent of Moody’s Rating of Ghana’s Local Currency
The rating agency also praised Ghana’s debt management framework, which has helped to reduce the country’s debt burden and improve its fiscal position. The government has implemented several measures to contain public debt, including fiscal consolidation and debt restructuring. Moody’s expects these efforts to continue in the coming years, which should further improve Ghana’s credit profile.
Moody’s also noted that Ghana’s economic growth has remained robust despite the challenges posed by the COVID-19 pandemic. The country’s GDP is expected to grow by 5.5% in 2023, up from an estimated 4.2% in 2022. This growth is supported by strong domestic demand and the government’s efforts to boost private sector investment.
The rating agency cautioned, however, that Ghana still faces several risks that could impact its credit profile. These include a potential slowdown in global growth, a decline in commodity prices, and political instability. Moody’s also highlighted the country’s high debt levels and low revenue mobilization as areas of concern.
Despite these risks, Moody’s maintained a stable outlook for Ghana’s local currency ratings. The rating agency expects the country to continue making progress on its debt management and fiscal consolidation efforts, which should help to mitigate some of the risks to its credit profile.
In response to the upgrade, Ghana’s Finance Minister expressed his appreciation for Moody’s decision. He noted that the government remains committed to maintaining fiscal discipline and implementing policies that support sustainable economic growth.
Overall, Moody’s upgrade of Ghana’s local currency ratings reflects the country’s improving credit profile and the government’s efforts to strengthen its fiscal position. While risks remain, the stable outlook suggests that Moody’s expects Ghana to continue making progress on its path towards greater economic stability and sustainability.
