Moody’s, an international rating agency has downgraded Ghana’s long-term issuer credit ratings to Ca from Caa2, a local newspaper reports on Thursday.
According to the Ghanaian Times, Ghana has been downgraded deeper into junk territory by Moody’s Investors Service on the likelihood that private creditors will incur steep losses during the government’s planned debt restructuring, Bloomberg reported.
“The country’s credit rating was slashed by two levels to Ca, the second-lowest score at Moody’s, according to a Tuesday statement. That puts Ghana on par with Sri Lanka, which is in default,” Bloomberg reported.
“The Ca rating reflects Moody’s expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currency debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 2022″, Moody’s said in a statement on its website.
“Given Ghana’s high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability,” it said.
Meanwhile, Ghana’s outlook was changed to stable as the restructuring will likely happen in co-ordination with creditors and under a program with the International Monetary Fund, according to Moody’s.
“The stable outlook balances Moody’s assumption that the debt restructuring will happen in co-ordination with creditors and under the umbrella of a funding programme with the International Monetary Fund against the potential for a less orderly form of default that could result in higher losses for private-sector creditors,” Moody’s said.
WN/APA