American credit rating agency, Standard and Poor’s (S&P) has downgraded Ghana’s foreign and local currency sovereign ratings from B minus to C.
S&P recorded a negative outlook for the country and argued that the new position is reflective of Ghana’s limited commercial financing options, and constrained external and fiscal buffers.
The credit rating agency, Standard and Poor’s claimed that the COVID-19 pandemic as well as the Ukraine-Russia conflict have magnified Ghana’s fiscal and external imbalances.
S&P 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 acknowledged Ghana’s efforts at revenue mobilization through the passage of a levy on electronic transactions and a legislation to tighten exemptions on tax payments, including for VAT, among other.
S&P however said 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 had affirmed Ghana’s ratings in February, as Moody’s downgraded the African nation to Caa1 with a stable outlook.
