Ghana’s credit worthiness has moved a notch further, a clear indication of gains made since the implementation of home grown policies began in 2014. The latest confirmation is captured in a statement released by International credit rating agency MOODY’s which gave Ghana a B3, changing the outlook from negative to stable.
The statement which follows recent assessment reports by the World Bank and the International Monetary Fund reaffirms assurances by Finance Minister, Seth Tekper and President John Mahama in response to critics, who have consistently painted a gloomy picture for political expedience.
MOODY’s rating is expected to bolster investor confidence in the economy, which suffered major setbacks since government began implementing its home-grown policies consolidated by the IMF programme.
For nearly three years, President Mahama’s government grappled with how to end the power crisis that virtually grinded the business sector to a halt, reduced significantly the huge budget deficit brought about as a result of the huge public sector wage bill following the implementation of the Single Spine Pay Policy and managed to stabilize the cedi against the dollar.
These were captured in MOODY’s report which identified three key drivers that informed its decision to revise the outlook.
First is the "significant deficit reduction and institutional reform implementation over the past year.
The second driver according to the report is the "Reduced government liquidity risk on the external side after the successful issuance of a recent $750 million Eurobond in earmarked to redeem the remaining $400 million October 2017 Eurobond maturity"
A statement issued by the Ministry of Finance attributed the third reason is the improved balance of payment dynamics, amid continued development of oil and gas resources through higher foreign direct investment inflow, supporting reserve buffers and reduced currency volatility.
In the report, Moody’s highlighted Ghana’s ongoing fiscal consolidation and strong fiscal discipline as credit positives, commitment to that level of prudence was recently codified into law via the Public Financial Management Law (PFML).
MOODY’s latest release exonerates Finance Minister, Seth Tekper and President John Mahama’s assurances to the business community especially over the last few months.
Last month, when President John Mahama addressed the Ghana Club 100 Awards ceremony, he disclosed a significant drop in the debt to GDP ratio from 72 percent at the end of 2015 to 63 percent at the end of May 2016.
Government has also announced that Budget deficit which stood at 12 percent in 2013 has also been brought down significantly and is projected to drop further to about 5 percent while Ghana’s growth is expected to end the year at 5 percent and hit over 8 percent next year.
Moody’s report comes at a time when opposition elements tried to undermine prudent measures that analysts say have resulted in a stabilized cedi, reduced inflation, improvement in power crisis and massive infrastructure projects in the roads, ports, health and education sectors.
Ghana recorded a successful Eurobond issuance of, priced competitively at 9.25 per cent in September 2016.
The over subscription of the US$750 million Eurobond to the tune of four (4) billion dollars is a clear demonstration of confidence from the global investor community in the consolidation of Ghana’s turnaround story,” he said.
Moody’s has also praised Ghana’s prudent debt management strategy, including the decision to utilise proceeds from the recent Eurobond to redeem upcoming external debt maturities, reducing rollover risks.
The stable outlook confirms government’s position that the trend in economic performance will prevail at least over the 12 to 18 months.
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