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.”
S&P reportedly claimed that the COVID-19 pandemic as well as the Ukraine-Russia conflict have magnified Ghana’s fiscal and external imbalances.
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.
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.
“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.
S&P had affirmed Ghana’s ratings in February, as Moody’s downgraded the African nation to Caa1 with a stable outlook.