Fitch affirms Ghana

Fitch Ratings said it affirmed Ghana's foreign- and local-currency issuer default ratings at B+ with positive outlooks, the short-term foreign-currency rating at B and the country ceiling at B+.

"Ghana remains a trend-setter in sub-Saharan Africa. Growth continues to outperform its rated peers, while macroeconomic stability has been maintained in the face of last year's oil price shock and single-digit inflation is near at hand," Paul Rawkins, senior director in Fitch's sovereign team in London, said in an agency rating.

"Externally, Ghana has benefited from continuing high non-oil commodity prices, while the G8 Multilateral Debt Relief Initiative has transformed the outlook for public and external debt sustainability."

The overall trend in public debt remains firmly downwards - the central government debt-to-GDP ratio fell to 42% in 2006 from 70% in 2005 - reflecting the impact of the Heavily Indebted Poor Countries debt initiative and the Multilateral Debt Relief Initiative. Fitch said these initiatives have brought Ghana's public and net external debt ratios in line with B medians and should release additional financial resources for growth and development.

However, the agency noted that these gains remain fragile and reversible. Thus, the 2007 budget, which has been hailed as a budget for growth - capital expenditure is set to rise to 14% of GDP from 12% to 13% in 2006 - also embraces a further 20% increase in public sector wages.

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