Vice President Dr. Mahamudu Bawumia
Rating agency, Standards and Poor’s (S&P) Global Ratings, has upgraded Ghana’s long-term local and foreign currency sovereign credit rating to ‘B’ from ‘B-.’
This confirms Vice President Mahamudu Bawumia’s recent comments that Ghana’s economy is being built on strong fundamentals.
S&P Global, in a statement released on Friday, said “the upgrade reflects our assessment that Ghana’s monetary policy effectiveness has improved, albeit from a low base, and will support the credibility of the inflation-targeting framework over the period.”
The S&P also assigned a stable outlook to Ghana’s economy.
The upgrade rating is coming at the time the national currency has depreciated against other trading currencies, particularly the United States dollar.
However, Vice President Mahamudu Bawumia says there is no cause for alarm over the recent depreciation of the cedi, adding that the economic fundamentals are solid like Rock of Gibraltar.
Giving a picture of the country’s economy, the Vice-President said though the cedi had depreciated in recent times, the economic fundamentals and indices are proof that the Ghanaian economy is in a relatively good shape as compared to previous years.
He said unlike the days of the erstwhile Mahama administration where the depreciation of the cedi was way out of control and speeding as though on a carbon highway, under the Akufo-Addo government, the economic indicators are firm and strong, hence the growth of the economy.
Dr. Bawumia disclosed this at a Student’s Entrepreneurship Initiative programme in Tamale on Friday.
The Vice President argued that low inflation, reduction of debt to GDP ratio, declining interest rates, increased growth rate, increased manufacturing and agricultural growth, among other economic indicators, showed that the Ghanaian economy was doing relatively well.
The main driver behind the upgrade is S&P’s assessment that Ghana’s banking sector stability and monetary policy effectiveness will support the credibility of inflation-targeting framework over the period.
The stable outlook balances Ghana’s fairly robust growth prospects, decreasing inflation and narrower current account deficits against risks from still-high budget deficits and a high stock of public sector debt.
“We could lower our ratings if Ghana’s economic growth is significantly lower than we expect and if its policymaking effectiveness were to weaken, for example, if fiscal deficits were to be materially larger than our expectations. We could consider raising our ratings if Ghana implements and adheres to measures that materially alleviate pressures on public finances and reduce public debt levels beyond our expectations. We could also see prospects for an upgrade if the current account deficit narrows faster than we expect and external debt and gross external financing needs are significantly reduced,” the report said.
A DAILY GUIDE Report