Moody’s rates Ghana’s IDR at B3 with a negative outlook
Credit rating agency, Moody’s Investor Services has rated Ghana’s Long-Term Issuer Default Rating (IDR) at B3 with a negative outlook.
The B3 rating and negative outlook reflect Ghana’s high debt burden that is unlikely to fall rapidly, continued weak debt affordability, high gross borrowing requirements and ongoing liquidity challenges in the face of downside economic, social and financial risks in the aftermath of the coronavirus pandemic.
The rating affirmation also takes into account improving growth prospects, resilient external sector performance and Ghana’s continued access to domestic and international capital markets, supported by the government’s structural economic reform agenda to improve export competitiveness and broaden the revenue base.
Ghana’s local currency (LC) country ceiling remains unchanged at Ba3 and the foreign currency (FC) country ceiling unchanged at B1. Moody’s assessment is that non-diversifiable risks are appropriately captured in a LC ceiling three notches above the sovereign rating, taking into account relatively predictable institutions and government actions, low domestic political, and geopolitical risk; balanced against a large government footprint in the economy and the financial system, external imbalances, and reliance on revenue from commodities that can lead to country-wide stress.
The FC country ceiling is maintained one notch below the LC country ceiling, reflecting existing constraints on capital account openness, balanced against moderate fiscal and monetary policy effectiveness.
According to Moody’s, while the government’s most recent budget sets out a plan of fiscal consolidation to reduce the fiscal deficit to 4.8% of GDP by 2024, the longer-term economic and social scarring from the coronavirus shock presents significant challenges to achieving such ambitious targets.