Moody’s Upgrades Ghana’s Credit Ratings, Changes Outlook
Moody’s Ratings has upgraded the Government of Ghana’s long-term foreign currency and local currency issuer ratings to Caa1 from Caa2 and changed the outlook to stable from positive.
Ratings analysts said they have also upgraded Ghana’s foreign currency senior unsecured debt ratings to Caa1 from Caa2 and the foreign and local currency senior unsecured MTN program ratings to (P)Caa1 from (P)Caa2.
According to Moody’s, the upgrade reflects improved prospects for debt reduction, where we project Ghana’s public debt ratio to decline to less than 60% of gross domestic product (GDP) by the end of 2026.
Ratings analyst said the country’s greater macroeconomic stability and favourable external dynamics are supporting more controlled funding costs and foreign exchange reserve replenishment.
Although large budgetary overruns in 2024 underscore Ghana’s susceptibility to policy slippages, nascent improvements to the fiscal framework will help anchor fiscal adjustment, Moody’s added.
Ghana’s credit constraints at the Caa1 rating level include the government’s limited financing options and reliance on short-term domestic issuances, weak debt affordability – exacerbated by a narrow revenue base – and high susceptibility to exchange rate and commodity price volatility.
The stable outlook balances baseline expectation of continued reduction in the government’s debt metrics and gradual domestic financing normalisation against the risks of renewed fiscal overruns and policy slippages, which would undermine macroeconomic stability and liquidity.
Concomitantly, Moody’s revised up by one notch Ghana’s local currency (LC) and foreign currency (FC) country ceilings to B1 and B2 from B2 and B3, respectively.
Non-diversifiable risks are captured in a LC ceiling three notches above the sovereign rating, taking into account relatively predictable institutions and government actions, limited domestic political risk, and low geopolitical risk; balanced against a large government footprint in the economy and the financial system and external imbalances.
The FC country ceiling one notch below the LC country ceiling reflects the authorities’ history of providing access to foreign exchange, notwithstanding constraints on capital account openness and weak policy effectiveness.
Moody’s said rationale behind the upgrade includes an improved macroeconomic outlook will remain supportive of debt reduction and more controlled funding costs, through the positive feedback between favourable external dynamics, foreign exchange reserve replenishment, lower inflation and reduced short-term interest rates.
Ghana economic growth has accelerated following the 2023 domestic debt restructuring, reaching 5.7% in 2024 and 6.3% in the first half of 2025.
“We project average growth to moderate to around 4% to 5% going forward, factoring in structural constraints including in regard to infrastructure and productivity dynamics”.
Ratings analysts explained that Ghana’s external position has materially improved, driven by favourable dynamics for its main export commodities – gold and cocoa – and solid remittance inflows.
The current account recorded a surplus of 2% of GDP in 2024 and 3.5% of GDP in the first half of 2025, a marked change following more than two decades of persistent deficits, and analyst’s project surpluses continuing into 2026.
Gross foreign exchange reserves – excluding gold, encumbered assets and petroleum funds – have increased from $2.5 billion at the end of 2023 to $6.0 billion as of June 2025, with monetary gold reserves adding another $3.2 billion.
“We expect further net reserve accumulation as external sector dynamics remain supportive and a domestic gold purchase programme contributes to foreign exchange inflows, providing improved capacity to meet increasing external debt servicing needs in the coming years”.
The country’s lower domestic funding costs are key to support debt affordability in the face of constrained government revenue generation capacity and reliance on domestic financing.
Financing since the domestic debt restructuring has been largely conducted through T-bills, augmented by multilateral external financing anchored by the current IMF programme.
Auctioned T-bill interest rates have dropped significantly since the start of the year, with the 364-day rate falling to 12.9% as of end-September from 30% at the end of 2024.
“We project interest spending to stabilise around 25-30% of government revenue from 47% in 2022 – prior to the debt restructuring – but weak debt affordability will remain a key credit constraint for Ghana”.
Moody’s said nascent improvement to fiscal framework will help anchor more prudent fiscal policy. The presentation of the 2025 budget revealed marked fiscal slippages left by the outgoing administration, a recurrent issue for Ghana during election years.
The headline 2024 central government budget deficit widened to 7.9% of GDP on a commitment basis, overshooting a targeted deficit of 4.2% of GDP. The government also disclosed GHS67.5 billion in gross accumulated arrears to domestic contractors and suppliers in 2024.
Notwithstanding this legacy, Moody’s analysts expect the government’s primary surplus target of 1.5% of GDP for this year to be successfully met and maintained in 2026, contributing to debt reduction.
The 2025 budget targets a narrowing of the headline budget deficit to 3.1% of GDP, and a material primary spending adjustment of around 5 percentage points of GDP this year.
Fiscal consolidation is on track as of the first half of the year, supported by lower-than-budgeted interest payment costs and a normalisation in capital expenditure and goods and services purchases, notwithstanding slight revenue underperformance.
Moody’s rating note acknowledged that the administration has taken steps to reinforce expenditure controls, strengthen the enforcement of fiscal targets, and anchor future debt reduction.
Fiscal objectives are underpinned by March 2025 amendments to the Public Financial Management Act, which introduce binding operational rules designed in consultation with the IMF.
These include maintaining an annual primary surplus of at least 1.5% of GDP on a commitment basis going forward, and reducing the public debt-to-GDP ratio to 45% or lower by 2034.
A new fiscal council will be operational by 2026, and if successfully implemented would strengthen future compliance and accountability. Commitment controls and procurement legislation have been strengthened with the aim of preventing the recurrence of last year’s unapproved expenditures.
“We expect these reforms to anchor lower fiscal deficits over time, although the next election in 2028 will offer the first tangible test of their effectiveness through political cycles”, Moody’s said.
It said Ghana’s stable rating outlook balances analysts’ baseline expectation of continued reduction in the government’s debt metrics and gradual domestic financing normalisation against the risks of renewed fiscal overruns and policy slippages, which would undermine macroeconomic stability and liquidity.
“We expect the revamped fiscal responsibility framework to anchor efforts towards fiscal discipline, notwithstanding the end of the current IMF programme in April 2026. However, the flexibility of fiscal policy is constrained by low revenue generation and a high interest payments bill.
“Although efforts are ongoing to address longstanding issues in the energy sector and the Ghana Cocoa Board, the energy, cocoa and financial sectors will continue to pose fiscal risks.
“Ghana also remains vulnerable to foreign currency risk, with around half of debt denominated in foreign currency. Lastly, reliance on commodities exposes the economy to volatility, notwithstanding the current favourable gold and cocoa price environment.
“We assume a gradual resumption of domestic bond issuances from 2026 onward, essential to broaden financing options and limit the current reliance on T-bills.
“Slower progress than we expect in regaining access to a broader range of longer-dated financing options would keep refinancing risk elevated in the context of large debt service obligations, including the repayment of domestic debt exchange programme bond maturities equivalent to around 2% of GDP annually in 2027 and 2028,” Moody’s stated. Fitch Affirms Nigeria at ‘B’ with Stable Outlook
