Respected rating organization, Standard and Poor (S&P) Global has lauded Ghana’s monetary policy in its latest ratings.
In a statement issued on Friday, S&P Global raised Ghana’s long-term foreign and local currency sovereign credit ratings from B- to B; a rating which captured a stable outlook for Ghana.
“Ghana’s improving banking sector stability and lower inflation support our view that the effectiveness and transmission mechanism of its monetary policy have improved,” S&P said in its statement.
“We are therefore raising our long-term ratings on Ghana to ‘B’ from ‘B-,” the statement continued, adding that “we are affirming the short-term foreign and local currency sovereign credit ratings at ‘B’.
According to S&P Global, 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.
Continuing its assessment, S&P Global further stressed that “the upgrade reflects our 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.”
On the banking sector, S & P observed that “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.”
F&P Global expressed optimism about Ghana’s economic growth, citing government’s ambitious economic reform program.
“The government is attempting to establish a firm fiscal consolidation path while embarking on an ambitious economic reform program, which together could reduce key rating weaknesses. The economy is reasonably well diversified and economic growth is above that of peers.
The positive ratings by world-renowned F&P is a major boost to the government, and has corroborated assertions by Vice President Dr Mahamudu Bawumia that the cedi’s performance against the country’s major trading currencies in the face of pressures on the global capital markets, is due to prudent economic management.
“The macroeconomic performance shows quite clearly that Ghana’s economic fundamentals are strong, and we can withstand the temporary challenges confronting the cedi,” said the Vice President said at the launch of theSchool Entrepreneurship Initiative at Ghana Senior High School in Tamale on Friday.
S&P Global Ratings is a world leader in credit ratings for governments and organizations and the organization has been in existence for more than 150 years.
