Ghana’s credit rating has been upgraded from a B- to a B by Standard and Poor’s (S&P), following their recent assessment of the country, and has given Ghana a stable outlook, for the first time in almost a decade.
A statement issued by the Ministry of Finance said the upgrade had come about as a result of strong efforts in monetary and fiscal policies.
It noted that debt dynamics had declined significantly for the first time in almost a decade, with the primary balance recording a surplus for the first time in almost a decade and a successful issuance of bonds at international markets during a global economic downturn.
Mr. Ken Ofori-Atta, Minister for Finance, congratulated the management of the Ministry and its agencies, adding: “…Going forward, investors are upbeat about the progress. We need to sustain the progress made so far and not derail in our efforts.”
The statement said sovereign credit ratings were a key evaluation principle for a country’s economic and political environment, which gives investors insight into the level of risk associated with investing in a particular country and has implications sourcing for cheaper funds on the international capital market; commitment to transparency in political and economic development; and for the possibility of increased foreign direct investment.
S&P noted that the upgrade reflected its assessment that Ghana’s monetary effectiveness had improved, albeit from a low base, and will support the credibility of the inflation-targeting framework over the period, adding that “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 high stock of public sector debt”.
The statement said efforts to achieve this upgrade had been futile for almost a decade as economic downturns and volatility in outcomes had persisted for some time, while public debt dynamics increased consistently since 2006.
S&P has been rating Ghana since 2003. At the time, Ghana achieved a B+ with a stable outlook. Ghana maintained this rating bill till December 2008 when Ghana’s stable outlook was revised downward to a negative position.
Ghana is rated by three rating agencies, Fitch Ratings, Moody’s and Standard and Poor’s. To support the evaluation process, Standard Chartered Bank provides advisory services for Ghana to the rating activities.