The Global Rating Agency S&P has cut Ghana’s sovereign rating from CC to “selective default”. This comes a day after the government stated it will suspend paying its debts to some of its external creditors, including those who own Eurobonds.
The Rating Agency has downgraded Ghana’s credit rating twice in the last two weeks, further lowering it to junk status. It however did not provide an outlook because it considers the moratorium a “selective default”. It also stated that it expected to drop ratings on Ghana’s foreign currency issues to ‘D’ (default) if the government missed the next scheduled coupon payment on its commercial foreign currency debt.
When it downgraded the country on December 7, 2022, it referred to Ghana’s proposed local debt swap as a “distressed exchange offer,” giving those bonds a “selective default” rating. Also, the downgrading of the country’s foreign currency bonds was in response to the government’s declared intentions to restructure that debt.
On December 19, 2022, the government said that, until an orderly restructuring of the impacted liabilities, all debt service payments under certain categories of external debt would be suspended. Payments on Eurobonds, business term loans, and the majority of bilateral debt were all suspended.
In a statement, the Finance Ministry stated that this suspension would not apply to payments for multilateral debt, new debts (whether multilateral or otherwise) committed after December 19, 2022, or debts relating to specific short-term trade obligations.
This rating means that our economy is still in a dire state and not on its way to recovery as the government projects. The government must adopt more stringent measures to ensure that we are out of this economic mess.
Priscilla Fumadorh
Priscilla is an entrepreneur and a creative communicator who loves to communicate through writing. She is passionate about national economic issues and does not miss a chance to offer her opinions on them for the good of the country.
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