Global credit ratings agency Moody’s has upgraded Ghana’s long-term local and foreign currency issuer ratings to “Caa2” from “Caa3” and “Ca,” respectively, in light of significant debt treatment that has alleviated the government’s financial burdens.
Additionally, the agency revised the country’s outlook from “stable” to “positive.” The “positive outlook reflects the potential for liquidity risk to ease amid ongoing fiscal consolidation efforts supported by an IMF programme,” Moody’s stated in its announcement.
Just last week, officials from the International Monetary Fund (IMF) and Ghana reached an agreement on their third review of the country’s $3 billion loan programme. In October, over 90% of Ghana’s bondholders approved a $13 billion debt overhaul, which is crucial for the gold and cocoa producer’s recovery from its near $30 billion debt default in 2022.
The debt restructuring is expected to reduce Ghana’s debt stock by $4.7 billion and provide cash flow relief totaling $4.4 billion during the duration of the IMF programme, which is set to expire in 2026, as reported by the government in June.
According to the country’s statistics agency, Ghana’s economy experienced a remarkable growth rate of 6.9% in the second quarter of 2024, the fastest in five years. Moody’s also anticipates that the country’s debt will continue to decrease, albeit at a slow pace, as the government resumes payments of interest and principal on all its debts.