Source: newsthemegh.com
Ghana’s long-term issuer rating in local currency has been raised by Moody’s Investors Service (Moody’s) from Ca to Caa3, and the stable outlook has been preserved.
The local currency senior unsecured MTN program’s rating has also been raised by Moody’s from (P)Ca to (P)Caa3. This improvement results from the government’s principal local currency debt restructuring being finished, which has decreased the estimated future losses on local currency debt.
The debt exchange has given Ghana some fiscal relief, lowering the possibility that it will ask the same creditors for another large-scale debt restructure in the short- to medium-term.
The possible harm to Ghana’s financial sector is what motivated this choice. Additionally, the International Monetary Fund (IMF) has started disbursing monies as part of its agreement with the nation, kicking off official sector help.
However, unless Ghana resolves its local currency debt that has not undergone restructuring and restructures its foreign currency debt, the Caa3 rating still reflects the current risk of potential default, which continues to be a real issue.
The balanced distribution of downside and upside risks is indicated by the stable outlook. On the one hand, protracted talks about renegotiating the government’s foreign currency debt and tightening restrictions on obtaining local currency financing present downside risks that could result in a greater loss than that predicted by the Caa3 rating in another local currency debt restructuring.
On the other hand, there is a chance that Ghana’s fiscal and external adjustment, supported by the official sector, including the IMF, would result in a relatively painless restructuring of its foreign currency debt.
The outlook is balanced in part because of these elements.