S&P upgrades Ghana’s credit rating to CCC+ on economic reform progress

S&P Global Ratings has upgraded Ghana’s foreign-currency credit rating from Selective Default to CCC .

The agency’s decision, announced on Friday, May 9, 2025, reflects increasing investor confidence and acknowledges the positive strides made under the leadership of Finance Minister Dr. Cassiel Ato Forson.

S&P highlighted Ghana’s progress in tackling its debt challenges and stabilizing its economy following a period of financial strain.

A key factor in the upgrade was the near completion of negotiations with the country’s remaining private lenders, a development that has eased considerable pressure on government finances. The successful Eurobond exchange in October 2024, which occurred prior to the current administration, was also noted.

The rating agency also commended the government’s commitment to implementing crucial reforms, which are beginning to yield tangible results. Notably, inflation, although still elevated at 22%, is showing a downward trend, supported by a strengthening cedi and reduced energy costs.

Finance Minister Dr. Cassiel Ato Forson has spearheaded several significant changes aimed at improving fiscal management. These include updates to financial laws, the reintroduction of spending regulations, and concrete steps towards establishing an independent fiscal council. These measures are designed to foster greater accountability and efficiency in the management of public funds.

Despite inheriting substantial outstanding debts, President Mahama’s government, which assumed office 122 days ago following the December 2024 elections, has prioritized expenditure cuts over increasing taxes. This approach aligns with the conditions of Ghana’s Extended Credit Facility (ECF) program with the International Monetary Fund (IMF).

The government has set ambitious fiscal targets, aiming for a budget surplus of 1.5% of GDP in 2025 and committing to limit annual spending growth to below 10% for the next four years. This represents a significant shift from the average annual spending growth of 28% experienced over the preceding two decades.

S&P projects a substantial reduction in Ghana’s public debt, net of cash reserves, from 71.4% of GDP in 2024 to a more sustainable 47.4% by 2028. Furthermore, interest payments, which previously consumed nearly half of the government’s revenue, have decreased to approximately 25% following the debt restructuring initiatives.

While acknowledging remaining risks, such as potential increases in spending during the 2024 election year and ongoing global economic uncertainties, S&P emphasized that Ghana’s improved economic standing, consistent reforms, and positive growth prospects underpin the improved credit rating.

The agency also recognized Ghana’s resilient economic growth of 5.7% in 2024, driven by strong performances in the industrial and services sectors. However, they cautioned about the long-term threats to cocoa production posed by illegal gold mining activities.

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