Economic Policy Advisor to the Vice President, Sharif Mahmud Khalid, has admitted that the recent credit ratings upgrade by Fitch is not the result of structural reforms or economic transformation.

He said it is largely the product of the controversial Domestic Debt Exchange Programme (DDEP).

Speaking on PM Express on Wednesday, June 17, following Fitch’s decision to lift Ghana’s rating from ‘Restricted Default’ to ‘B-’ with a stable outlook, he stated with candour what is driving the improved external perception.

“If you look at these ratings,” he said, “when we took office, remember that Prof [Bokpin] mentioned that we started to make some gains thanks to the Domestic Debt Exchange Programme.

"Because the DDEP did give some gains, and obviously that would have an impact on any ratings that are to come externally.”

The admission contrasts sharply with narratives crediting tough fiscal discipline and macroeconomic reform.

Instead, Dr Khalid revealed the upgrade is “artificially” influenced by the effects of debt restructuring, not by deep or permanent economic fixes.

“What it means is that artificially, there would be some gains thanks to a Domestic Debt Exchange Programme,” he said.

“Now, when we came in or took over office, what happened? We committed, reactivated the sinking fund, and committed to paying all of this.”

Dr Khalid explained that in the language of rating agencies, the current B- rating from Fitch simply means “you’ve improved in terms of your risk of defaulting on a debt payment.”

He described Ghana’s reactivation of the sinking fund as a kind of insurance signal to external creditors.

“If you’ve activated a sinking fund, which is an insurance measure to servicing most of these, and then you’ve committed to both external and domestic debt programs, invariably, it’s going to improve.”

He acknowledged that the ratings gain is less about current spending discipline or internal reforms and more about debt restructuring outcomes and future commitments.

“This is not for the internal market,” Dr Khalid said. “This is for the external market, which we are not ready as of yet to even start pushing through, because we believe in stabilising the domestic market.”

On the issue of fiscal restraint, Khalid appeared measured but non-committal.

“As far as spending—what you call it, overspending—tightening the controls, reducing appointments, among other issues, which are all signals…”

He admitted there is ongoing “paper spending” based on budget projections, regardless of actual disbursement.

“Once the budget is read, the market responds to the budget, whether you spend a penny or not. Because the market knows what you’re going to spend.”

Pressed on whether government is becoming “bullish,” Dr Khalid sidestepped the term, saying only that external credit signals are reacting to visible signs of financial commitment, not necessarily to delivered change.

“It’s government’s own commitment, initiative and program,” he stressed.