Moody’s Ratings has upgraded the Government of Ghana’s long-term foreign currency and local currency issuer ratings to B3 from Caa1 and changed the outlook to stable from positive.
In a statement, the rating agency said it has also upgraded Ghana’s foreign currency senior unsecured debt ratings to B3 from Caa1 and the foreign and local currency senior unsecured medium-term note programme ratings to (P)B3 from (P)Caa1.
The upgrade reflects a sustained easing in Ghana’s domestic financing conditions that has led to a reduction in financing costs and a meaningful improvement in debt affordability, albeit from a weak level.
Moody’s said financing costs has remained lower despite external headwinds from the Middle East conflict, reflecting continued fiscal discipline underpinned by institutional improvements, and favourable export prices that support macroeconomic stability.
It said it expects these improvements to last. At the B3 level, the rating incorporates credit constraints including high susceptibility to terms-of-trade volatility and exchange rate depreciation, relatively low government revenue generation that constrains the flexibility of fiscal policy, and weak but improving policy effectiveness.
These are balanced by credit strengths including a more moderate debt burden, a track record of financing support from multilateral creditors, and a track record of political stability and the relative strength of legislative and executive institutions.
Moody’s said the upgrade captures the improvement in Ghana’s debt affordability as a result of a sustained easing in domestic financing conditions supported by fiscal discipline and macroeconomic stability on the back of favourable commodity prices.
SOURCE: GRAPHIC
