From Xinhua via Spy Ghana

Two international credit rating agencies have given various assessments of the health of Ghana’s credit worthiness ahead of its third straight Eurobond issue later in 2015.

While Fitch maintained its sovereign rating at “B” for Ghana in a release issued over the weekend, Moody on Thursday downgraded Ghana’s rating by one notch to B3 from B2, with a negative outlook.

The two agencies also maintained a negative outlook for the West African cocoa, oil and gold producing country.

Fitch affirmed Ghana’s short-term foreign currency IDR at ‘B’ and country ceiling at ‘B’ while rating its senior unsecured foreign and local currency bonds at ‘B’.

Key drivers, according to Fitch, included the expected approval by the Board of International Monetary Fund (IMF) of Ghana’s 940 million-dollar Extended Credit Facility, which could ease severe external and fiscal financing pressures.

“However, Ghana’s track record of increasing spending ahead of elections in 2008 and 2012 raises concerns about the government’s ability and willingness to meet the ambitious fiscal consolidation targets set out by the IMF,” the agency added.

Fitch observed that the Ghanaian authorities had, ahead of the program, introduced VAT on petroleum products, agreed to a modest public sector wage increase, as well as maintaining the National Fiscal Stabilization Levy and a special import levy.

“Commitment to the program should result in a recovery of donor inflows, foreign investment in the domestic bond market and reduce domestic funding costs over time,” the agency stated.

While the government, in its mid-March budget review, revised its fiscal deficit projection from 6.5 percent to 7.5 percent for the 2015 ending, Fitch forecasts the deficit to be 8. 0 percent of Gross Domestic Product (GDP) in 2015 due to continued revenue under-performance.

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