International Rating organization, Standard and Poor’s (S&P) Global has raised Ghana’s long-term foreign and local currency sovereign credit ratings from ‘B’- to ‘B’.
In a Statement released on Friday, September 14, said the country’s outlook is stable.
“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,” it added.
Standard and Poor’s explains that the improvement in inflation and banking stability also indicate the effectiveness of the central bank’s monetary policy.
“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,” it stated.
According to the rating agency, it could also see prospects for an upgrade if the current account deficit narrows faster than it expect and external debt and gross external financing needs are significantly reduced.
Meanwhile, the rating agency has warned that it could lower Ghana’s ratings if economic growth is significantly lower than expected and if fiscal deficits grow larger than expectations.
“On the contrary, Ghana could scale higher in its ratings if it implements and adheres to measures that materially alleviate pressures on public finances and reduce public debt levels which stood at 154.3 billion cedis or 63.8 percent of GDP as at May this year”.
The new rating is expected to endear the economy to global investors, as it potents increased faith in its activities by the rating agency. This should translate into reduced risk in domestic investments and increased appetite for same by investors.
