The current Moody’s downgrade of Ghana’s long-term sovereign bonds to further junk territories brings the total number of downgrades and revisions to 7 in less than 11 months this year.

Barely 48 hours ago, Moody’s dropped its ratings on Ghana’s long-term sovereign bonds from ‘Caa2’ to ‘Ca’, and changed the outlook to stable.

This concluded the review for downgrade that was initiated at the time of the 30 September 2022 rating action.

According to the ratings agency, “the ‘Ca’ rating reflects Moody's expectation that private creditors will likely incur substantial losses in the restructuring of both local and foreign currencies debts planned by the government as part of its 2023 budget proposed to Parliament on 24 November 2022.”

“Given Ghana's high government debt burden and the debt structure, it is likely there will be substantial losses on both categories of debt in order for the government to meaningfully improve debt sustainability”. Moody’s stressed.

7 downgrades from 3 credit ratings agencies in 2022

At the beginning of the year, Fitch was the first to drop Ghana’s sovereign bonds rating from ‘B’ (negative outlook) to ‘B-’ (negative). In less than 3 weeks, Moody’s also followed with their first downgrade.

S&P was next to follow through in August. Ghana has since then experienced different downgrades and reviews.

IMF confirms debt restructuring

The Internal Monetary Fund (IMF) has confirmed that government of Ghana has declared its intention to conduct a debt operation ( also called debt restructuring) in 2023.

According to an update on the fund’s website, “authorities [Ghana] have assessed their public debt as being unsustainable over the medium term. Together with efforts to bring the government deficit down, they have announced their intention to conduct a debt operation to ensure debt sustainability.”

The Bretton Woods Institution has welcomed government’s decision to tread the path of debt operation.

“We welcome the authorities’ intentions to implement policies that will ensure the sustainability of public finances” the Fund stressed.

The IMF however, indicated that the “nature of engagements and debt operations between Ghana and its creditors are sovereign decisions.”