Moody's lowers Ghana's credit rating
The US agency justified this decision by citing the country's growing debt burden.Moody's has announced that it dropped the sovereign rating of Ghana from "B2" to "B3", with a negative outlook.
"The first driver of the downgrade is Ghana's deteriorating fiscal strength as reflected in the significant increase in the government debt ratio to an estimated 67.2 percent of GDP in 2014 from 54.8 per cent in 2013," Moody's said in a statement seen by Jeune Afrique.
"The negative outlook reflects further downside risk to the country's debt dynamics and liquidity pressure in the short-term if the country's policies fail to successfully contain its fiscal deficit, stabilise its currency and address current impediments to higher economic growth," it added.
In October, Standard & Poor's also lowered the rating of Ghana to "B-", a level similar to the one recently awarded by Moody's.
The continued widening of the budget deficit has been a major constraint to fiscal and debt sustainability. Following an expenditure overrun in 2012, marked by an unprecedented budget deficit of around 12% of GDP, the situation persisted in 2013, with about the same level of budget deficit, according to figures from the African Development Bank.
According to the same source, recent revenue enhancing and expenditure consolidation measures are expected to ease the fiscal deficit to nine per cent. The country also has finalised negotiations with the IMF on an aid package of nearly $930 million (€850 million).