Weak institutional arrangements, high debt servicing constrain Ghana’s rating – S&P
Ratings agency, S&P Global has stated that Ghana’s institutional arrangements are weak, but improving. According to the US-based firm, the cost of servicing government debt remains elevated, saying, the weak institutional arrangements and the high servicing debt constrain Ghana’s ratings. In its rating article on Ghana, it warned that the Ghanaian economy is reliant on […]
S&P Global has rated Ghana's institutional arrangements as weak, but acknowledges that they are improving. The US-based agency highlighted that the high cost of servicing government debt is a significant factor limiting Ghana's ratings. In its report on the country, S&P emphasized that the Ghanaian economy is heavily dependent on agriculture and gold exports, making it vulnerable to external shocks.
The agriculture sector, which accounts for 20% of the country's Gross Domestic Product, could suffer due to droughts, floods, or prolonged conflicts in the Middle East, which would increase fertilizer costs. Similarly, gold exports, which constitute over 66% of Ghana's exports, could face a significant drop if gold prices decline faster than anticipated.
This economic vulnerability could further disrupt the recent efforts to control inflation. While the government's fiscal reforms are in their early stages and have not yet been tested through economic and electoral cycles, S&P warns of potential fiscal slippages through 2029. The administration, led by President John Mahama and supported by a strong parliamentary majority, is committed to reforming public finances, but the true effectiveness of these measures remains to be seen.
Written by urgent.news from MyJoyOnline Ghana's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
