Ghana’s faces up to a downward credit ratings revision
As was expected by many economists and financial analysts, international sovereign credit ratings agency, Fitch has revised Ghana’s economic outlook downwards to B negative from B stable. The downward revision from stable to negative, although keeping Ghana’s B rating implies that the economy has been on a downward trajectory rather than its previous level standing.
Although Finance Ministry officials are publicly protesting downgrade, in private they admit that it was largely expected, being the inevitable consequent on government’s spending in 2020 to curb the spread of COVID 19 and ameliorate its economic effects on both businesses and households. Moodys, one of the three international ratings agencies that track Ghana recently retained its rating at B with negative outlook and Fitch’s revision brings it in line. The third agency that rates Ghana, Standard & Poors, is expected to release its latest ratings over the next few months.
The revision of the outlook by Fitch to negative reflects the significant deterioration in public finances, stemming from the Covid-19 pandemic and the delays to the government’s fiscal consolidation efforts, which reduce Ghana’s ability to absorb further shocks for an extended period. This though was in line with government’s deliberate strategy of combating COVID 19’s spread and accompanying economic effects first and worrying about the inevitable effects on the state’s fiscal position later.