Moody’s has upgraded Ghana’s long-term local and foreign currency issuer ratings to “Caa2” from “Caa3” and “Ca,” respectively, in an announcement made on Friday. The credit ratings boost is a result of Ghana’s significant progress in restructuring its debt, which has substantially reduced financial strain on the government. In addition to the ratings upgrade, Moody’s revised the country’s outlook from “stable” to “positive,” signaling greater confidence in the nation’s fiscal direction.
According to Moody’s, the shift to a positive outlook reflects the possibility of easing liquidity risks, with ongoing fiscal consolidation supported by an IMF program. These reforms are seen as essential to stabilizing the country’s financial position in the near future.
The upgrade follows the conclusion of an agreement between IMF staff and Ghanaian authorities on the third review of the country’s $3 billion loan program. Earlier in October, more than 90% of bondholders agreed to a $13 billion debt restructuring package, a critical move in Ghana’s recovery from its $30 billion debt default in 2022.
This debt restructuring is expected to reduce Ghana’s overall debt by $4.7 billion and provide much-needed cash flow relief amounting to $4.4 billion during the IMF program, which runs until 2026, according to government projections.
Additionally, Ghana’s economy is showing signs of strength, with the national statistics office reporting a 6.9% growth in the second quarter of 2024, marking the fastest economic expansion in five years. While Moody’s expects the country’s debt burden to gradually decline, it cautioned that the process would take time as the government resumes payments on both interest and principal obligations.
