The Minister of Finance, Dr Mohammed Amin Adam, has welcomed the positive ratings assigned Ghana’s economy by Moody’s, a ratings agency, describing it as a positive development.
The minister said the upgrade of Ghana’s long-term local and foreign currency issuer ratings to Caa2 from Caa3 and Ca with a positive outlook was a very positive development.
“In fact, this is Ghana’s first rating upgrade since February 2022,” he stated.
He said the upgrade resulted from the completion of Ghana’s comprehensive debt treatment, which provided meaningful relief to government finances.
Moody’s
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Credit rating agency, Moody’s, upgraded Ghana’s credit ratings, reflecting significant improvements in the country’s financial situation.
The agency upgraded Ghana’s long-term local and foreign currency issuer ratings to “Caa2” from “Caa3” and “Ca,” respectively.
The US-based firm also revised the country’s outlook to “positive” from “stable.”
In a statement, it explained that the “positive outlook reflects the potential for liquidity risk to ease amid ongoing fiscal consolidation efforts supported by the International Monetary Fund (IMF)”.
Context
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The upgrade follows significant progress made by the country in its debt restructuring exercise which is expected to reduce debt to Gross Domestic Product (GDP) to 55 per cent by 2026.
Ghana has made remarkable progress in its debt restructuring activities, with the government exchanging local bonds worth GH¢82 billion for 12 new ones at reduced coupon rates and longer tenors.
On the external front, the country has also finalised its agreement with its bilateral creditors to restructure debts of $5 billion.
Recently, the country’s consent solicitation to seek the permission of Eurobond holders to amend the original terms of the bonds saw over 98 per cent participation from investors.
The debt treatment yielded a 37 per cent reduction in the nominal value of Ghana’s debt, equivalent to $5 billion forgiveness, and $4.3 billion in debt service savings during the IMF programme.
Last week, the IMF staff and Ghana reached an agreement on their third review of the country’s $3 billion Economic Facility Credit (ECF) programme.
It is based on this progress that Moody’s has now revised the country’s ratings upwards.
The rating agency, earlier this year, indicated that it was likely to upgrade Ghana’s credit rating following the country’s Eurobond exchange.
The agency said it had completed a periodic review of Ghana’s ratings, including its long-term issuer ratings of Caa3 for local currency and Ca for foreign currency.
These ratings, it said, reflected the government’s ongoing debt restructuring under the G20 Common Framework initiated in December 2022.
“The restructuring of foreign currency debt, which constitutes nearly half of Ghana’s total debt, has progressed significantly following announcements in June 2024 regarding a Memorandum of Understanding on official sector debt and an agreement in principle with bondholders,” the statement from Moody’s said.
Substantive upgrade
Commenting on the development, Dr Amin Adam said it was the first substantive upgrade of the country’s credit rating, coming on the heels of Fitch Ratings’ designition of Ghana’s new United States dollar bonds as ‘CCC+’ and upgrade of the Long-Term Local-Currency Issuer Default Rating to ‘CCC+’ from ‘CCC’.
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