International ratings agency, Fitch, could review Ghana’s credit rating of B, saying, the “high cost of government’s debt burden is an important rating weakness”.

This it says will continue to squeeze government’s other spending priorities.

“We indicated that our assessment of the medium-term trajectory of public debt would be an important rating sensitivity when we affirmed Ghana’s Long-Term Foreign-Currency Issuer Default Rating at ‘B’ with a Stable Outlook in October 2020”, it said in its latest report, titled “Ghana’s Long Fiscal Consolidation Plan Has Slippage Risk”

The international ratings agency in October last year affirmed Ghana’s ability to borrow (Long-Term Foreign-Currency Issuer Default Rating) at ‘B’ with a Stable Outlook.

But the recent challenges in the economy if not address immediately will compel the ratings agency to review the country’s ratings downward.

According to Fitch, the gradual pace of projected consolidation will mean Ghana’s ability to absorb any new shocks will remain weak for an extended period.

As such, any such shocks would increase the likelihood of government debt remaining on an upward trajectory beyond 2022.

It also said there is a significant risk that public finances could fall short of the goals outlined in the budget.

According to government, interest costs were estimated at 45% of total revenue. The large increase in debt means that interest payments will increase this year.

Fitch also sees risks to the revenue forecasts, adding, achieving total revenue of an average of 16.8 percent of GDP between now and 2024 may be difficult.

“The government plans to increase fiscal revenues, aided by 1.0% increases in VAT and the National Health Insurance Levy. However, achieving total revenue of an average of 16.8% of Gross Domestic Product over 2021–2024 may be difficult”, it emphasised.

Government revenue averaged 15.4% of GDP over 2016–2019 period.