Moody’s upgrades Ghana’s rating, signals positive outlook

Moody’s upgrades Ghana’s credit rating to Caa2, citing debt restructuring and IMF support, with a positive outlook for future fiscal stability
GLOBAL credit ratings agency Moody’s has upgraded Ghana’s long-term local and foreign currency issuer ratings, raising them to ‘Caa2’ from previous levels of ‘Caa3’ and ‘Ca.’ This marks a significant improvement for Ghana, driven by the country’s extensive debt restructuring, which has eased the government’s financial pressures.

Moody’s also shifted Ghana’s outlook from ‘stable’ to ‘positive,’ reflecting the possibility of further reductions in liquidity risks. The ‘positive outlook reflects the potential for liquidity risk to ease amid ongoing fiscal consolidation efforts supported by an IMF programme,’ Moody’s said in a statement on Friday. This comes as Ghana continues its fiscal consolidation efforts, backed by a $3bn loan programme from the IMF.

Last week, Ghana and IMF officials reached an agreement during their third review of the programme. In October, over 90 percent of Ghana’s bondholders approved a $13bn debt restructuring plan, helping the country recover from its near $30bn debt default in 2022.

The restructuring is expected to cut Ghana’s debt by $4.7bn and offer cash flow relief worth $4.4bn during the IMF programme, which runs until 2026.

Ghana’s economy has shown signs of recovery, with growth hitting 6.9 percent in the second quarter of 2024, the highest in five years, according to the country’s statistics agency. Moody’s projects a continued, though gradual, reduction in Ghana’s debt as the government resumes payments on its obligations.