Ratings agency, Standard and Poor’s has raised its long term ratings on Ghana to ‘B’ from ‘B minus’.
The agency also says the outlook is stable for Ghana’s rating.
A statement on the latest stance by S and P attributed the rise to improving banking sector stability as well as lower inflation.
Standard and Poor’s explains that the improvement in inflation and banking stability also indicate the effectiveness of the central bank’s monetary policy.
According to the S&P, though the policy has been from a slow base, it will support the inflation targeting framework over the period.
“The stable outlook balances Ghana’s fairly robust growth prospects, decreasing inflation, and narrower current account deficits against risks from still-high budget deficits and a high stock of public sector debt,” it said.
The central bank has been embarking on its policy regime which aims at bringing inflation down to 8 percent plus or minus 2.
This has included a reduction in the policy rate which is the rate at which the central bank lends to commercial banks, from a region of 26% in November 2015 to 17 percent as at July this year.
“Although inflation had also tripped down from a region of 19.2 percent in March 2016 to 9.6 in March this year, has gone up marginally to 9.9 percent as at August this year,” the statement said.
Meanwhile, the rating agency has warned that it could lower Ghana’s ratings if economic growth is significantly lower than expected and if fiscal deficits grow larger than expectations.
“On the contrary, Ghana could scale higher in its ratings if it implements and adheres to measures that materially alleviate pressures on public finances and reduce public debt levels which stood at 154.3 billion cedis or 63.8 percent of GDP as at May this year”.
By citibusinessnews.com
