Government has expressed its disappointment in Standard and Poor’s (S&P) Global Ratings decision to downgrade Ghana despite the bold policies implemented in 2022 to address macro fiscal challenges and debt sustainability.

Contained in a statement issued by the finance ministry dated August 8, 2022, it revealed that Standard and Poor’s Global Ratings downgraded Ghana’s foreign and local currency credit ratings from ‘B-/B’ To ‘CCC+/C’ with a negative outlook. It noted that S&P’s downgrade is due to the “intensifying financing and external pressures on the economy”.

“The government is disappointed by S&P’s decision to downgrade Ghana despite the bold policies implemented in 2022 to address macro fiscal challenges and debt sustainability which have been significantly exacerbated by the impact of these global external shocks on the economy.”
Finance Ministry

The ministry explained that in arriving at their decision, the credit rating agency considered the lingering effects of the COVID-19 pandemic and the severe global shock of the Russian invasion of Ukraine on Ghana and the consequent fiscal and external imbalances and elevated “gross financing needs in the face of International Capital Market” hiatus. Additionally, it highlighted the limited commercial financing options and the “credible steps taken by government to fast-track fiscal consolidation and the passage of key revenue bills”.

Government committed to reviving the economy

In spite of the poor ratings by S&P, the finance ministry expressed that government will continue to be proactive in addressing the impact of these “external and domestic headwinds” on the economy and on the lives and livelihoods of Ghanaians. Government, the ministry stated, has implemented key revenue and expenditure measures, including the “30% cut in discretionary” expenditures.

“The delays in the passage of key revenue measures introduced in the 2022 Budget affected revenues performance in the first half of the year. However, all the revenue measures introduced in the 2022 Budget, including the review of the MDA Fees and Charges Bill, the Tax Exemption Bill, the E-Levy Bill, have all now been promulgated by Parliament. These fiscal measures are now in full implementation mode to support our fiscal and debt sustainability policies.”
Finance Ministry

The finance ministry emphasized that government is committed and confident that it will successfully emerge from these challenges in the shortest possible time as it has demonstrated the track record to do so in the Akufo-Addo led Government.

“Our current engagement with the International Monetary Fund for a Programme, incorporating government’s Enhanced Domestic Program (EDP), is expected to support our drive to restore and sustain macroeconomic stability; debt sustainability and promote growth and job creation whilst ensuring social protection to achieve our vision of a Ghana Beyond Aid.”
Finance Ministry

Standard and Poor’s (S&P) Global Ratings, an American credit rating agency on August 6, 2022, pushed Ghana’s debt further into speculative territory, lowering its foreign and local currency sovereign ratings to CCC+/C from B-/B.

S&P in its outlook for the country recorded negative and noted that “reflecting Ghana’s limited commercial financing options, and constrained external and fiscal buffers”. The agency indicated that Ghana has also been affected by a lack of access to Eurobond markets.

“While these changes could improve the tax take going forward, the situation remains challenging, and over the first half of 2022, the fiscal deficit has exceeded the government’s ambitious target.”
Standard and Poor’s

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