Ghana Upgraded on Improving Fiscal, BoP Performance – S&P
S&P Global Ratings raised its long- and short-term foreign and local currency sovereign credit ratings on Ghana to ‘B-/B’ from ‘CCC+/C’. According to the rating note, the outlook is stable. Ratings analysts also revised up S&P transfer and convertibility assessment on Ghana to ‘B-‘ from ‘CCC+’.
S&P said the stable outlook balances the potential for stronger balance-of-payments (BoP) performance and improvements in Ghana’s fiscal outcomes as a result of ongoing expenditure reforms against still-high debt-service costs, reform implementation risks, and Ghana’s sensitivity to terms of trade, such as gold and cocoa prices, which have been unusually favourable over the last year.
“We could lower the rating on Ghana over the next 12-18 months if fiscal reform momentum stalled with Ghana recording wider budgetary deficits, underpinning a rise in public debt service costs, or straining the government’s ability to refinance maturing debt as it comes due.
“The rating could also come under pressure if currently favourable terms of trade weakened substantially faster than we currently forecast or if export volumes weakened, underpinning a return to higher external imbalances”, S&P said.
The ratings note highlight that Ghana’s rating could face pressure if the remaining part of debt restructuring stalls, potentially stemming from disagreements between various groups of creditors over comparability of treatment principles and terms they receive under the G20 Common Framework restructuring process.
“We could raise the rating in the next 12-18 months if Ghana consistently sustained fiscal deficits at lower levels, reducing debt service costs and strengthening its access to foreign financing while its external position continued to strengthen–including the accumulation of additional foreign currency reserves, for example”.
The upgrade reflects Ghana’s gradually strengthening balance of payments and fiscal positions, which have been supported by resilient growth of the domestic economy as well as favourable terms of trade, including prices for gold and cocoa–Ghana’s key export items–together accounting for over 60% of goods’ exports.
S&P Ratings forecast that Ghana’s gross international reserves will strengthen to $10.4 billion at the end of 2025 from $6.8 billion a year earlier.
“We also note that Ghana’s new government, which came to power in December 2024, is enacting policies to safeguard against fiscal slippages, which were frequent.
“This includes a mandated 1.5% of GDP primary surplus on an annual basis, for debt to be brought to 45% of GDP by 2034, as well as a proactive framework for correcting future fiscal deviations.
“We forecast Ghana’s inflation will remain under 10% from over 20% at the start of 2025, while the cedi has appreciated by about 30% compared with the U.S. dollar so far this year”.
Ghana has made substantial progress in restructuring its government debt following the default in December 2022. In particular, Ghana successfully completed deals for exchanging its local currency government debt in 2023 as well as $13.1 billion worth of Eurobonds in October 2024.
Ratings analysts understand that the authorities are currently in talks to finalize the restructuring of the remaining $5 billion worth of official and commercial debt, which constitutes about 7% of total public debt, subject to restructuring negotiations with the rest thus already settled.
“We note, however, that disagreements persist with the African Export-Import Bank and the Eastern and Southern African Trade and Development Bank regarding their preferred creditor status treatment in the exchange negotiations, a position disputed by Ghana’s official creditor committee.
“In addition, we understand that the holders of Saderea commercial notes (relating to restructured notes initially intended to finance Ghana’s health sector) claim they should receive preferential treatment based on an alleged guarantee from the Bank of Ghana (BoG; the central bank). In our view, these disputes introduce additional complexity and could delay the full completion of debt restructuring”, S&P stated.
Despite the improvements, rating on Ghana remains constrained by still weak institutional arrangements, elevated government debt levels, and debt service costs.
The economy is susceptible to erratic weather and external shocks, particularly given its reliance on agriculture (20% of GDP) and gold exports (over 60% of goods exports in first half 2025).
These could face pressure should prices fall more significantly than currently anticipated. S&P also note that fiscal reforms are still in their early stages and are thus untested through election cycles, with risks of fiscal slippages through 2028. GTCO Rises Softly, Investment Firm Sets N110 as Target Price
