Moody’s Downgrades Ghana Again


Ken Ofori-Atta, Finance Minister

RATING AGENCY Moody’s has once again downgraded Ghana’s long-term issuer and senior unsecured debt ratings from CAA1 to CAA2, asserting that the new downgrade reflects the recent macroeconomic deterioration.

According to the agency, the deterioration has further heightened the government’s liquidity and debt sustainability difficulties and increased the risk of default.

The downgrade is coming on the wheels of the expansion of the economy by 4.8% in the three months through June, sustained by manufacturing and cocoa production.

Moody’s said inflation continues to rise on high levels, while the Cedi is under significant pressure, with a combination of “a sharp rise in interest rates, high inflation and a rapidly weakening currency exacerbate the government’s debt challenges.”

“Without external support, the government’s policy levers to arrest a worsening macroeconomic backdrop and heavier debt burden are extremely limited,” the rating agency noted and added that the government’s small revenue base is largely and increasingly absorbed by interest payments.

It said this had intensified the policy dilemma between competing objectives, including servicing debt while meeting essential social needs, adding, “As a result, the risk of an eventual default has increased.”