Ratings agency, S&P Global Ratings, has revised Ghana’s rating from B-/B to CCC+/C.

In a statement issued on Friday August 5, 2022, the global ratings agency, said though government has taken steps toward consolidating the fiscal deficit, including the recent passage of the Exemptions bill, high borrowing costs and softening growth make it difficult to put debt to GDP on a downward path.

“In light of the government’s elevated net and gross financing needs and limited access to external capital markets, as well as the domestic financial market’s constrained financing capacity, we lowered our foreign and local currency sovereign ratings on Ghana to ‘CCC+/C’ from ‘B-/B’,” it said.

After a careful assessment of the economy, S&P also said its outlook for the country is negative, “reflecting Ghana’s limited commercial financing options, and constrained external and fiscal buffers.”

S&P Global Ratings noted that the Covid-19 pandemic and the Russian invasion of Ukraine have worsened Ghana’s fiscal and external imbalances.

“Demand for foreign currency has been driven higher by several factors, including nonresident outflows from domestic government bond markets, dividend payments to foreign investors and higher costs for refined petroleum products,” it said.

S&P further added that Ghana has also been affected by lack of access to the Eurobond markets.

“Local authorities have passed a levy on electronic transactions and legislation to tighten exemptions on tax payments including for VAT, among other moves. 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”, the statement said.