S&P cuts Burkina Faso

S&P said it downgraded its long-term local- and foreign-currency ratings for Burkina Faso to CCC+ from B and placed them on CreditWatch with developing implications.

The downgrade reflects our view that Burkina Faso's solvency hinges increasingly on favorable political, business, financial, and economic conditions. In our view, these conditions have worsened due to the heightened uncertainty stemming from the military coup in Burkina Faso on Jan. 24, 2022, that ousted President Roch Marc Christian Kabore, who was reelected for a second five-year term in November 2020,” S&P said in a press release.

The coup could lead to economic and financial sanctions like those taken on nearby Mali after a military coup there.

“In our view, the country could now find it much harder to access the concessional financing it needs to fund the new five-year development plan for 2021-2025 that the government introduced late last year. The coup could also potentially lead to administrative disorganization and increase the likelihood of default on the country's commercial debt. Furthermore, the country's willingness to service its debt could come into question, should the junta decide to divert all or some of the resources ringfenced for debt service to finance efforts to combat jihadist groups in the Sahel,” the agency said.

S&P said it plans to update or resolve the CreditWatch by its next scheduled publication date for its Burkina Faso ratings on May 13.

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