Ghana In Fragile …After Fitch And Moody’s Downgrading

Head of African research at Standard Bank Group Ltd, Jibran Qureishi

A study conducted by Standard Bank Group Limited has shown that Ghana is part of the ‘Fragile Five’ indebted nations in Africa.

According to the study, the five fragile economies which include Kenya, Angola, Ethiopia and Zambia will face debt risks over the next two years, Bloomberg reported.

The report also said Ghana’s debt risk increased due to the country’s worsening public finances.

Standard Bank also disclosed that the study which covered 18 countries also showed that Uganda was the African continent’s brightest star in 2022 in terms of debt management.

The head of African research at Standard Bank Group Ltd, Jibran Qureishi, is reported to have told Bloomberg that “Debt sustainability (of these five countries, including Ghana) now requires sharper focus.”

Jibran Qureishi said Ghana must go for an International Monetary Fund bailout to restore confidence in investors.

He further stated that given Ghana’s debt situation, it would need a premium over U.S. treasuries of more than 1,000 basis points for investors to regain confidence in the international bonds it issues.

Jibran Qureishi added that, because China is now not willing to loan funds to African countries, Ghana’s main hope to improve its fiscal position is the IMF.

The head of African research at Standard Bank Group added that it will be difficult for Ghana to improve its current fiscal position without the IMF because its revenue estimates are too ambitious and also cutting down its expenditure would be difficult due to public-sector wages and debt-service costs accounting for more than half of its expenditure.

It is recalled that rating agencies Fitch and Moody have all raised concern about Ghana’s economy, something the government was not enthused with.

Fitch for instance in its rating downgraded Ghana’s Long-Term Foreign Currency-Issuer Default Rating (IDR) to B- from B, making Ghana’s outlook negative.

Moody’s downgraded Ghana’s Long-Term Issuer and Senior unsecured bond rating to Caa1 from B3.

According to Moody’s, the downgrade is due to the increasingly difficult task government faces in addressing the intertwined liquidity and debt challenges, pandemic induced revenue underperformance, tight conditions on international markets, materially decreasing governance and institutional strength and inflexibilities in government budget.

A study conducted by Standard Bank Group Limited has shown that Ghana is part of the ‘Fragile Five’ indebted nations in Africa.

According to the study, the five fragile economies which include Kenya, Angola, Ethiopia and Zambia will face debt risks over the next two years, Bloomberg reported.

The report also said Ghana’s debt risk increased due to the country’s worsening public finances.

Standard Bank also disclosed that the study which covered 18 countries also showed that Uganda was the African continent’s brightest star in 2022 in terms of debt management.

The head of African research at Standard Bank Group Ltd, Jibran Qureishi is reported to have told Bloomberg that “Debt sustainability (of these five countries, including Ghana) now requires sharper focus.”

Jibran Qureishi said Ghana must go for an International Monetary Fund bailout to restore confidence in investors.

He further stated that given Ghana’s debt situation, it would need a premium over U.S. treasuries of more than 1,000 basis points for investors to regain confidence in the international bonds it issues.

Jibran Qureishi added that, because China is now not willing to loan funds to African countries, Ghana’s main hope to improve its fiscal position is the IMF.

The head of African research at Standard Bank Group added that it will be difficult for Ghana to improve its current fiscal position without the IMF because its revenue estimates are too ambitious and also cutting down its expenditure would be difficult due to public-sector wages and debt-service costs accounting for more than half of its expenditure.

It is recalled that rating agencies Fitch and Moody have all raised concern about Ghana’s economy, something the government was not enthused with.

Fitch for instance in its rating downgraded Ghana’s Long-Term Foreign Currency-Issuer Default Rating (IDR) to B- from B, making Ghana’s outlook negative.

Moody’s downgraded Ghana’s Long-Term Issuer and Senior unsecured bond rating to Caa1 from B3.

According to Moody’s, the downgrade is due to the increasingly difficult task government faces in addressing the intertwined liquidity and debt challenges, pandemic induced revenue underperformance, tight conditions on international markets, materially decreasing governance and institutional strength and inflexibilities in government budget.