LONDON, July 26 (Fitch) Fitch Ratings has assigned Ghana's new
USD bond issue a
'B+' rating. The rating is in line with Ghana's 'B+' Long-term
Issuer Default Rating, on which the Outlook is Negative.
Fitch affirmed Ghana's ratings on 15 February 2013 (see 'Fitch
Outlook to Negative; Affirms at 'B+'').
This second Ghana sovereign Eurobond is a 10-year USD750m issue
with a coupon of
KEY RATING DRIVERS
Ghana's ratings are supported by its robust economic performance
as well as a
strong growth outlook. This will be boosted by rising oil
production, as well as
the wider benefits for the broader economy from the development
of the oil
sector. Infrastructure spending, which is needed to reduce
also underpin growth. Measures of governance and the business
above both the 'B' and 'BB' medians.
The Negative Outlook reflects the worsening trend in public
2012 the fiscal deficit widened to 12.1% of GDP in the run up to
election. The rapid deterioration over and above official
projections suggests a
serious loss of fiscal control and further reduced the
credibility of fiscal
policy against an already weak track record. The authorities aim
to reduce the
deficit to 9% of GDP in the current fiscal year, but upside
including persistently high bond yields, continued arrears
build-up as well as
weak expenditure control.
As a result of the worse-than-expected fiscal outturn,
government debt has risen
to 49.4% of GDP in 2012, up from 31% of GDP at the time of the
and above similarly rated countries ('B' category median 38.9%
of GDP) despite
strong growth and high commodity prices.
The blow-out in the budget deficit has contributed towards a
widening in Ghana's
current account deficit, placing Ghana in a more vulnerable
current account deficit has widened to 12.3% of GDP in 2012, up
from 8.6% in
2011. The deficit is expected to remain above 10% in 2013
pressure on the currency as well as international reserves. The
cedi has fallen
by 6% against the dollar since the start of the year, while
reserves have declined to 2.9 months of import cover
Lower per capita income and human development compared to the
'B' median also
constrain the rating.
Failure to set out and implement a credible fiscal consolidation
plan as well as
improve expenditure control would put downward pressure on the
material increase in external vulnerability related to the large
deficit, such as declining or volatile capital inflows and
falling reserve cover
would also be negative for the rating.
Over the medium term, the new oil and gas sector has the
potential to boost
Ghana's economic output, diversify the economy and strengthen
public and external balance sheets. All these factors should
strengthen Ghana's creditworthiness.
Fitch assumes the budget outturn will be broadly in line with
commitment to reduce the deficit to 9% of GDP in 2013 and 6% in
a combination of real expenditure restraint, particularly on
expenditure, as well as continuing robust revenue growth.
Fitch assumes Ghana's GDP growth remains robust, in excess of
prospects will depend on oil production coming on stream as
increasing to 120,000b/d in 2013 and to 600,000 by 2018; the
development of the gold sector; and further investment in
this basis, key debt ratios are eventually expected to stabilise
Favourable growth forecasts and a sustainable external position
favourable terms of trade with no sustained deep fall in
particularly gold, cocoa and oil which together make up 83% of
+44 20 3530 1511
Fitch Ratings Limited
30 North Colonnade
London E14 5GN
+44 20 3530 1444
+44 20 3530 1176
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530
Additional information is available at www.fitchratings.com.
Applicable criteria, 'Sovereign Rating Methodology' dated August
available at www.fitchratings.com.
Applicable Criteria andALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH