![]() ![]() The initiation of the review for downgrade is prompted by the ongoing negotiations between the government and the IMF over a funding programme that may include a condition for debt restructuring to ensure debt sustainability. As a result, the risk of an eventual default has increased. Without external support, the government's policy levers to arrest a worsening macroeconomic backdrop and heavier debt burden are extremely limited the government's small revenue base, largely and increasingly absorbed by interest payments, further intensifies the policy dilemma between competing objectives, including servicing debt while meeting essential social needs. Combined, a sharp rise in interest rates, high inflation and a rapidly weakening currency exacerbate the government's debt challenges. Despite Ghana's tightening of monetary policy in response to the global price shock, inflation continues to rise from high levels and the currency has been under very significant pressure. The rating downgrade to Caa2 reflects the recent macroeconomic deterioration, further heightening the government's liquidity and debt sustainability difficulties and increasing the risk of default. ![]() Moody's has also downgraded the senior unsecured MTN programme ratings to (P)Caa2 on review for downgrade from (P)Caa1. Paris, Septem- Moody's Investors Service ("Moody's") has today downgraded the Government of Ghana's long-term issuer and senior unsecured debt ratings to Caa2 from Caa1 and placed the ratings on review for downgrade. Rating Action: Moody's downgrades Ghana's rating to Caa2 and places it on review for downgrade "There is a high likelihood that the IMF support programme currently being negotiated will require some form of debt treatment due to the climbing interest costs and structurally low revenue as a percentage of GDP," Fitch said in the rating action commentary. It said the downgrade reflected the increased likelihood that Ghana will pursue a debt restructuring given mounting financing stress, with surging interest costs on domestic debt and a prolonged lack of access to Eurobond markets. Last month, Fitch Ratings also downgraded Ghana's Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) to 'CC', from 'CCC'. ![]()
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