Ghana’s credit rating, which had already been reduced from Caa2 to Ca by the international rating agency Moody Investors Service, is now further trash.
Ghana currently has Moody’s second-lowest credit rating, according to a statement the company released on November 29.
However, this places the nation on an equal footing with Sri Lanka, which is already in default.
According to Moody’s, “the Ca rating reflects the assumption that private creditors will likely suffer sizable losses in the restructuring of both local and foreign currency debts envisaged by the government as part of its 2023 budget proposal to Parliament on November 24, 2022.”
“Given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability,” the statement by Moody’s explained.
With a possible debt restructuring programme on the cards under the IMF, Moody’s however changed Ghana’s outlook to stable.
“The stable outlook balances Moody’s assumption that the debt restructuring will happen in coordination with creditors and under the umbrella of a funding program with the IMF against the potential for a less orderly form of default that could result in higher losses for private-sector creditors,” the rating firm explained.
The recent downgrade of Ghana’s credit ratings comes after Fitch Ratings recently ranked Ghana at CC which is two levels above default while S&P Global Ratings rated the country in CCC+ status placing it in junk territory.
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