Ghana’s economy continues to show prospects of a strong rebound as two Credit Rating Agencies, Moody’s and S & P affirmed Ghana’s Credit Rating at B3 and B- respectively. The current rating is underpinned by Ghana’s improving growth prospects, resilient external sector performance, and continued access to the capital markets.
Notably, the two rating agencies recognized the efforts of Government to “build back better” through the innovative Ghana CARES Program.
Furthermore, both credit rating agencies acknowledged that Ghana’s economy is recovering from the effects of the pandemic faster than its peers. As such, the Finance Ministry highlighted the need to focus more on growth and the implementation of the Ghana CARES Program.
Meanwhile, S & P, in particular, maintained Ghana’s rating on the back of the growing economic prospects. Its rating is also based on the relatively transparent and responsive political institutions. The stable outlook balances risks from fiscal and external financing pressures against the country’s medium-term economic growth prospects.
Debt affordability concerns
Understandably, both credit rating agencies raised some concerns about Ghana’s debt affordability and levels. Responding to this, the Finance Ministry highlighted the government’s commitment to its debt sustainability and fiscal consolidation efforts.
The Ministry of Finance explained that between 2019 and 2021, the government has undertaken various liability management measures to reduce the external debt stock and the interest expense burden.
“As a result, the government bought back and retired over US$900m worth of Eurobonds which has reduced the external debt stock significantly.
“On the domestic front, Government continues to conduct active liability management. This year alone, an amount of GH¢4.84 billion has been used for domestic liability management, which involves the buy-back of 3-yr and 5-yr bonds. This has reduced the refinancing and rollover risks and interest cost inherent in the public debt portfolio. Our strategy has also positively impacted the interest rates on the primary and secondary securities markets”.Ministry of Finance
Furthermore, the Ministry assured that Government is doing its best to vaccinate the majority of adult Ghanaians. This will help achieve herd immunity. This, the Ministry said, is “a need that has become even more imperative with the seeming third wave upon us”.
To this end, the Ministry stated that Ghana is in constant talks with the African Vaccination Acquisition Trust (AVAT) for the supply of 17 million Johnson & Johnson doses. The Ministry also added that the first batch of the vaccine is will be available this month under the program.
Saving lives and livelihoods
The Ministry further reiterated the government’s resolve to save lives and livelihoods, especially since the onset of the Pandemic. As such, the Ministry disclosed that the government has implemented various life-saving initiatives and interventions in that direction.
“These interventions led to significant unbudgeted expenditures and elevated debt levels. However, Ghana’s economic fundamentals remain strong despite these interventions, and recovery prospects are high. This is reflected in the positive narrative by both rating agencies and other organizations such as the IMF”.Ministry of Finance
In addition, the Ministry averred that Ghana’s medium-term plan relies on a robust strategy to safeguard growth beyond 5% in the medium term. It also aims at returning to the fiscal path of under a 5% of GDP fiscal deficit. Another objective of the plan is to attain a positive primary balance by 2024.
As such, the Ministry noted that it will sustain this progress and accelerate this through the Ghana CARES transformation program.
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