Posted on Tuesday, 10 December 2013 16:37

Credit rating agencies losing hope in Ghana

By Billie Adwoa McTernan

Ghanaian currency, the Cedi. Photo©ReutersCredit rating agency Standard & Poor has revised Ghana's outlook to negative, on the basis of the country's large budget deficit, which is expected to fall to 10.2 percent of GDP this year from 12 percent in 2012.


The government failed to meet its 9 percent target for 2013.

"The outlook revision follows the deterioration we see in Ghana's fiscal and external position. The ratings are mainly constrained by the government's weak fiscal stance in terms of deficits, debt stocks, and interest burden. External vulnerabilities and still-low economic development are additional rating weaknesses," the agency said.

However, the agency still expects GDP growth to be 7 percent or higher between 2013-2016.

Moody's too revised Ghana's bond outlook from stable to negative.

In July the country issued its second foreign bond - a $750mn eurobond - and in August finance minister Seth Terkper revealed plans to issue more long-term bonds to to assist in the funding of infrastructure projects.

Both adjustments come after Fitch downgraded the country from B positive to B negative in October.

This year has seen a slow in cocoa production and a fall in the price of gold, the combination of which has led to lower than expected revenue.

Despite the difficulties government assures that the measures put in place to revive the economy – fuel subsidy removal and stabilisation of the single spine structure – will come into affect in 2014 and put Ghana back onto a level footing.

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