Imani Africa's vice president According to Mr. Bright Simons, the government disregarded the market's warning signals, which led S&P Global Ratings to downgrade Ghana's foreign and domestic currency sovereign ratings on Friday, August 5, from B- to CCC+/C, further pushing the country's debt into speculative territory.
Mr. Bright Simons stated in a tweet that the Ghanaian government had been warned that failure to indicate to the market its plans for severe fiscal consolidation will result in another downgrading. It is really unfortunate that it will not listen. As always."
According to S&P, Ghana's limited commercial financing choices and restrictive external and fiscal buffers are the reason for its unfavorable outlook. According to S&P, the Covid-19 pandemic and the Russian conflict have made Ghana's fiscal and external imbalances worse.
The agency noted that a number of factors, including nonresident withdrawals from domestic government bond markets, dividend payments to overseas investors, and increasing prices for refined petroleum products, have increased demand for foreign currency.
According to the agency, the country has also been hampered by a lack of access to the markets for Eurobonds. Among other things, local governments have approved laws to limit tax exemptions, notably for VAT, and to impose a fee on electronic transactions.
The situation remains difficult, and for the first half of 2022, the budget deficit exceeded the government's aggressive objective, according to S&P, even though these changes "could improve the tax take going forward." In February, S&P had upheld Ghana's ratings while Moody's had lowered the African country to Caa1 with a stable outlook.
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