S&P lowers Ghana’s ratings from B+ to B over oil sector, sizeable deficit

Standard & Poor’s has lowered Ghana’s credit ratings from B+ to B citing lack of clarity in the country’s oil sector, the management of government’s oil revenues as well as the large fiscal deficit.

The new rating however, has a stable outlook.

“The lowering of the ratings on Ghana reflects our view of the cumulative effect of a large and erratic fiscal deficit, substantial supplier arrears, high debt levels, loss-making state-owned enterprises, and problems in the banking sector,” an analyst, Ravi Bhatia had said.

The new rating places Ghana at par with Kenya, Sri Lanka and Bolivia.

According to Bhatia, Ghana’s medium-term fiscal deficit target of 2.1% in 2011 and 1.6% in 2012 is “unrealistic.”

Prof. Cletus Dordonoo, an economist remarked briefly on the telephone that the B rating is still good for Ghana.

Ghana’s budget deficit was projected to decline to 7.5% of GDP in 2010 from 9.5% in 2009. It was about 15% in 2008.

Ghana is due to join the league of the world’s oil producers later this year, raising the interest of investors in the country. Tulow Oil, the major stakeholder in the country’s oil industry says it will put Ghana among the world’s top 50 oil producers when commercial production begins.

By Emmanuel K. Dogbevi