Ghana at par with Sri Lanka as Moody’s downgrades credit rating from Caa2 to Ca

Global rating firm, Moody Investors Service has once again downgraded Ghana's credit rating into further junk from its earlier Caa2 status to Ca.

According to a statement issued by Moody’s on November 29, Ghana’s credit rating is now ranked as the second lowest score by the firm. This however puts the country on the same level as Sri Lanka which is already in default.

“The Ca rating reflects Moody’s expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currencies debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 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.

MA