Editorial: Recent upgrade is a positive sign

Moody’s recent upgrade of the country’s credit rating is viewed as a positive sign for the nation’s economic recovery and future growth prospects.

Last week, Moody’s Ratings upgraded Ghana’s long-term local and foreign currency issuer ratings to Caa2 from Caa3 and Ca respectively, while also changing the outlook to positive from stable.

It marks the first rating upgrade since February 2022, signalling a potential turning-point in the country’s financial standing. Naturally, Minister of Finance Dr. Mohammed Amin Adam hailed the upgrade.

He emphasised that this development, coupled with Fitch Ratings’ recent positive assessment, underscores the success of Ghana’s comprehensive debt treatment and ongoing economic reforms.

Moody’s cited Ghana’s extensive debt treatment as the primary driver for its upgrade, which has provided substantial relief to government finances. Additionally, Moody’s indicated that should the risk factors dissipate, Ghana’s rating could migrate to a higher level.

Analysts however express modest optimism about the potential for further rating upgrades, noting it is crucial to remain cautious. Investors will want to see consistency in fiscal reform, inflation control and sustained economic growth.

Moody’s cautioned about potential risks, including “the resumption of debt service payments, fiscal risks in the run-up to the December elections, potential negative pressure on the currency, as well as reliance on expensive short-term debt – all of which represent still-elevated liquidity risk, constraining the rating”.

Some commentators are quick to point out that the country will soon be able to participate in capital markets, since confidence is being restored in the economy and is likely to unlock access to concessional international finance.

Dr. Adam assured the public of government’s continued commitment to reform, stating: “Lessons from the painful debt restructuring exercises and the sacrifice of all Ghanaians continue spurring us on to consolidate all gains through our strong reform agenda, characterised by fiscal discipline, institutional reforms and an emphasis on growth through small and medium scale enterprises”.

It is important to stay the course as there is every reason to expect that Fitch, Standard & Poor’s and others will take similar actions.

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