Investing.com -- S&P Global Ratings has upgraded Ghana’s foreign currency issuer credit rating to ’CCC+’ from ’SD’ (selective default), based on the nearing completion of the country’s debt restructuring negotiations with its commercial creditors. The upgraded rating better reflects S&P’s forward-looking opinion of Ghana’s creditworthiness.
Ghana continues to struggle with a high debt service burden, weak tax administration, and spending overruns, especially during election years. Inflation, currently at 21.2%, remains high but is falling due to cedi appreciation and lower energy prices. The shift of the country’s current account into surplus has resulted in increased external liquidity.
On May 9, 2025, S&P Global Ratings raised its long- and short-term foreign currency sovereign credit ratings on Ghana to ’CCC+/C’ from ’SD/SD’. The outlook on both the foreign and local currency ratings is stable. Ghana’s transferability and convertibility assessment remains ’CCC+’.
The stable outlook balances supportive economic growth, ongoing fiscal reforms, and Ghana’s improved external position against high debt service costs and a weak (although improving) track record of public financial management through election cycles.
The upgrade reflects recent steps taken by authorities to restructure remaining commercial debt, following a successful Eurobond exchange in October 2024. The government is nearing completion of its offers to restructure loans to external creditors, primarily commercial banks. This progress follows the successful completion of local currency and Eurobond restructurings, and a memorandum of understanding with bilateral creditors signed and ratified on Jan. 29, 2025.
The ratings on Ghana are supported by improving external metrics, with significant increases in gold export receipts and a reaccumulation of foreign exchange (FX) reserves. Economic growth remains resilient despite the protracted debt restructuring process. External debt makes up 62% of government liabilities, or 49% of GDP, implying that debt sustainability will remain contingent on exchange rate developments, and therefore key export prices.
The government aims to improve fiscal management and support the economy, despite constrained policy options. The transition of power in the aftermath of 2024 elections has been smooth, with the incoming government identifying large expenditure arrears that are subject to an official audit. The government’s parliamentary majority bolsters its capacity to implement reforms; however, policy flexibility remains constrained.
The administration plans to prioritize expenditure cuts over revenue mobilization in line with the IMF’s Extended Credit Facility conditions. The IMF program, launched in May 2023 and set to expire in May 2026, has disbursed approximately $2.36 billion of the total $3 billion. The government has renewed its commitment to the existing program.
The government has started legislative reforms, including amendments to the Public Financial Management Act, reestablishment of fiscal rules, and the creation of an independent fiscal council. It also aims to streamline government programs, enhance tax compliance, and reallocate resources toward infrastructure and social protection.
In 2024, growth reached 5.7%, exceeding expectations and marking the best performance since 2019. This growth came from rebounds in the industrial and services sectors, while the agricultural sector faced adverse weather and reduced crop yields.
The government’s initiative to purchase gold from artisanal miners is formalizing the trade and significantly boosting exports, particularly in the context of high gold prices. However, this has negative implications for the agricultural sector, especially cocoa farming.
Fiscal performance should improve following significant slippage in 2024. The fiscal deficit on a cash basis was largely in line with the revised budget, but the government accrued substantial arrears to suppliers and contractors, resulting in the deficit on a commitment basis being 3.7 percentage points of GDP larger than budgeted.
Ghana’s FX reserves buffers are being rebuilt from low levels thanks to favorable current account dynamics. In 2024, the current account recorded its largest surplus on record, reaching $3.58 billion, or 4.4% of GDP. An improved trade surplus and higher remittance inflows fueled the increase. This helped usable FX reserves (gross FX reserves net of encumbered assets) rise by $2.8 billion to almost $4.6 billion.
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