Moody’s downgrades Ghana to B2

Moody's Investors Service said it downgraded Ghana's sovereign rating by one notch to B2 from B1.

The outlook is negative.

Moody’s said the key drivers of the action are: (a) Ghana's deteriorating fiscal strength, as reflected in the rising debt level and worsening debt affordability amid persistently high fiscal deficits; and (b) the increase in Ghana's vulnerability to shocks given its large debt-refinancing needs and wide external imbalances.

Concurrently, the agency changed the foreign-currency bond ceiling to Ba3 from Ba2 and the foreign-currency deposit ceiling to B3 from B2. The local currency bond and deposit country ceilings remain unchanged at Ba2.

Moody’s said the primary driver of the decision to downgrade is the country's high and rising debt burden and deteriorating debt affordability. The agency expects public debt to exceed 65% of GDP by the end of 2015 from 55.7% in 2013, mirrored by rising interest expenses relative to government revenues.

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