International rating agency Standard & Poor’s [ S&P ] has raised Ghana‘s credit rating from B- to B category in a recent report.
According to Standard & Poor’s, it raised Ghana’s rating as a result of “improved monetary policy effectiveness” and stable economic outlook.
“Ghana’s improving banking sector stability and lower inflation supports our view that the effectiveness and transmission mechanism of its monetary policy have improved. We are therefore raising our long-term ratings on Ghana to ‘B’ from ‘B-‘.
We are affirming the short-term foreign and local currency sovereign credit ratings at ‘B’. The outlook is stable,” S&P said in its recent report released on September 14, 2018.
S&P said its upgrade of Ghana’s rating reflects their assessment that “Ghana’s monetary policy effectiveness has improved, albeit from a low base, and will support the credibility of the inflation-targeting framework over the period.”
It also cited the Central Bank’s recapitalization of banks in Ghana will go a long way in strengthening the economy.
“In our view, the Bank of Ghana’s (BoG) policy rate has also been fairly effectively transmitted through the financial system to market participants. The government’s recapitalization of the banking system in 2018 is a fiscal expense weighing on our fiscal assessment, but should ultimately strengthen the banks and allow them to support financial intermediation in the economy,” S&P added.
The ruling government have come under heavy criticisms for failing to fix the falling cedi against the US Dollar and also deal with its general impact on the larger economy.
But the Vice President, Dr. Mahamudu Bawumia, who is also the head of government’s economic management team said the economy has performed well as compared to the previous years.
Dr. Bawumia largely blamed the cedi’s depreciation on the strength of the US dollar, saying other currencies like the pounds were also struggling against the US dollar.
“You look at the economic growth, you look at the interest rates, you look at inflation, you look at the deficit, you look at the external accounts, you look at the gross international reserves and you look at the debt to GDP ratio, all these fundamentals indicate that Ghana’s economy is getting stronger fundamentally.”