Moody's Investors Service has affirmed the Government of Ghana's long-term local and foreign currency issuer and foreign currency senior unsecured bond ratings at B3 and changed the outlook to negative from positive. Moody's has concurrently affirmed the local and foreign currency senior unsecured MTN ratings at (P)B3 and the rating of the bond enhanced by a partial guarantee from the International Development Association (IDA, Aaa stable) at B1.
The decision to change the outlook to negative reflects the rising risks, ultimately emanating from the coronavirus outbreak, to Ghana's funding and debt service, with financing beyond immediate official creditor emergency support looking increasingly vulnerable. The outbreak has caused an unprecedented shock across a wide range of global sectors, markets and regions. Moody's views it as a social risk under its ESG framework, given the implications for public health and safety and, indirectly, sovereigns' economic and fiscal strength. Ghana is particularly vulnerable to these shocks, due to high reliance on external financing both in local and in foreign currency, and very weak debt affordability.
However, while financing pressures are rising, they are not yet acute, and Ghana has emerging strengths that were previously reflected in the positive outlook assigned in January this year. The affirmation of the B3 rating balances rising financing pressures and longstanding weaknesses relating for example to high debt and revenue underperformance, against those positive features exemplified in a return to primary surpluses and smoothing of the debt maturity profile, an improving -- albeit still fragile - current account position, and the restoration of power supply and renewed infrastructure investment. Should Ghana pass through the crisis with a contained weakening in debt, liquidity and external metrics, those growing underlying strengths could be expected to dominate the profile once again.
Ghana's foreign- and local-currency bond and deposit ceilings remain unchanged, namely the foreign-currency bond ceiling at B1, the foreign-currency deposit ceiling at Caa1, and the local-currency bond and deposit ceilings at Ba3.
