S&P downgrade: Quicken pace of fiscal consolidation – Economist to gov’t

His call comes as international ratings agency, S&P Global Ratings, last week revised Ghana’s rating from B-/B to CCC+/C, a situation that threatens Ghana’s debt sustainability efforts with investors demanding higher credit risk premium.

It significantly hinges on rebuilding fiscal and external buffers because that has been the main point of concern for investors.  There must be an improvement in our fiscal deficit position.

“That is a tall order though government has already signalled that it is working to record a primary surplus equivalent to 0.4 worth of GDP

We are not far from the direction that the fiscal situation should be heading, except that it is moving slower than the rating agencies would anticipate

S&P Global Ratings also noted that the Covid-19 pandemic and the Russian invasion of Ukraine have worsened Ghana’s fiscal and external imbalances.

It would be recalled that government earlier this year introduced some revenue generation measures such as the E-Levy, the Tax Exemptions Bill, some cuts in discretionary spending.

However, S&P notes that while these changes could improve revenue generation going forward, the situation remains challenging.