The international rating agency Moody’s has pushed further down, Ghana’s rating, after Finance Minister Seth Terkper announced the crippling effects of the tumbling crude oil prices on Ghana. Ghana’s sovereign foreign-currency rating was lowered one step to B3, six levels below investment grade, Moody’s said on Thursday.
The Finance Minister announced to Parliament recently that government had lowered to about 64%, expected oil revenues for the year 2015, which is expected to have serious implications for government spending.
Seth Terkper also noted that the budget deficit will be wider than previously expected, amending the target from 6.5% of GDP to 7.5%. Moody’s latest downgrade on Ghana is the second in less than one year.
“The negative outlook reflects further downside risk to the country’s debt dynamics and liquidity pressure in the short-term if the country’s policies fail to successfully contain its fiscal deficit, stabilize its currency and address current impediments to higher economic growth,” Moody’s said.
Government turned to the International Monetary Fund (IMF) for support after the economic conditions in the country sent worrying signs to the international community. The IMF intervention was expected to shore up confidence in the economy but another international rating agency Fitch, downplayed the impact and said it will be “challenging” for Ghana to stick to the 3-year staff level agreement it reached with the IMF)worth $940 million.