Big boost for economy …As S&P raises Ghana’s rating to B

Ghana’s credit rating has been raised from B- to B category by the international rating agency, Standard & Poor’s.

According to Standard & Poor’s, it raised Ghana’s rating following “improved monetary policy effectiveness” and stable economic outlook.

“Ghana’s improving banking sector stability and lower inflation supports our view that the effectiveness and transmission mechanism of its monetary policy have improved. We are therefore raising our long-term ratings on Ghana to ‘B’ from ‘B-‘. We are affirming the short-term foreign and local currency sovereign credit ratings at ‘B’. The outlook is stable,” S&P said in its recent report released on September 14, 2018.

S&P said its upgrade of Ghana’s rating reflects their assessment that “Ghana’s monetary policy effectiveness has improved, albeit from a low base, and will support the credibility of the inflation-targeting framework over the period.”

It also cited the Central Bank’s recapitalisation of banks in Ghana would go a long way in strengthening the economy.

“In our view, the Bank of Ghana’s (BoG) policy rate has also been fairly effectively transmitted through the financial system to market participants. The government’s recapitalisation of the banking system in 2018 is a fiscal expense weighing on our fiscal assessment, but should ultimately strengthen the banks and allow them to support financial intermediation in the economy,” S&P added.

The report said “We could lower our ratings if Ghana’s economic growth is significantly lower than we expect and if its policymaking effectiveness were to weaken, for example if fiscal deficits were to be materially larger than our expectations.”

“We could consider raising our ratings if Ghana implements and adheres to measures that materially alleviate pressures on public finances and reduce public debt levels beyond our expectations. We could also see prospects for an upgrade if the current account deficit narrows faster than we expect and external debt and gross external financing needs are significantly reduced,” the report said.

 By Times Reporter

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