Moody's Investors Service (Moody's) has upgraded the Government of Ghana's local currency long-term issuer rating to Caa3 from Ca and maintained the stable outlook.

Concurrently, Moody's has upgraded the local currency senior unsecured MTN programme rating to (P)Caa3 from (P)Ca. Following the completion of the government's main local currency debt restructuring, Moody's assessment of future expected losses on local currency debt has diminished.

Through this exchange, Ghana has achieved a degree of fiscal relief and is therefore unlikely to seek and obtain another similar-scale debt restructuring in the short to medium term from the same creditors given the damage it would cause to its financial sector.

Moreover, official sector support has started, with the IMF's first disbursement under its programme with the country.

However, the Caa3 rating captures elevated redefault risk, which remains tangible until Ghana's local currency debt that has not been restructured is settled and until the foreign currency debt is restructured.

The stable outlook reflects balanced downside and upside risks. On the one hand, a protracted period of negotiations over the restructuring of the government's foreign currency debt and increasing constraints on access to local currency funding are downside risks that could lead to another local currency debt restructuring with larger losses than implied by the Caa3 rating.

On the other hand, the foreign currency debt restructuring could go relatively smoothly while Ghana's fiscal and external adjustment could proceed with the support of the official sector, including the IMF.