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Standard & Poor Downgrades Ghana’s Credit Ratings

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AMERICAN CREDIT rating agency, Standard and Poor’s (S&P) Global Ratings, last Friday downgraded Ghana’s foreign and local currency sovereign ratings from B-/B to CCC+/C.

According to a report by MarketWatch, S&P recorded a negative outlook for the country and argued that the new position is “reflecting Ghana’s limited commercial financing options, and constrained external and fiscal buffers.”

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S&P reportedly claimed that the COVID-19 pandemic as well as the Ukraine-Russia conflict have magnified Ghana’s fiscal and external imbalances.

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The credit rating agency said there had been a high demand for foreign currency, which is driven by factors, including non-resident outflows from domestic government bond markets, dividend payments to foreign investors and higher costs for refined petroleum products.

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The report indicated that Ghana had also been affected by a lack of access to Eurobond markets.

The agency said the government had passed a levy on electronic transactions and a legislation to tighten exemptions on tax payments, including for VAT, among other moves to raise local revenue mobilisation.

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“While these changes could improve the tax intake going forward, the situation remains challenging, and over the first half of 2022, the fiscal deficit has exceeded the government’s ambitious target,” S&P reportedly stated.

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S&P had affirmed Ghana’s ratings in February, as Moody’s downgraded the African nation to Caa1 with a stable outlook.

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