Fitch downgrades Ghana's credit rating on spending worries.

 
Fitch ratings agency downgraded Ghana's sovereign rating on Thursday saying the government of the gold, cocoa and oil producing country wasn't keeping tight enough control of its spending.


Ghana is considered one of Africa's brightest economic prospects with a stable democracy and an economy expected to keep growing at 8 percent in 2013.
But economists have increasingly expressed concern this year about the risks posed by a high budget deficit and rising debt.
"Ghana's creditworthiness has been further weakened by the government's failure to fully implement its fiscal consolidation plan in 2013," Fitch said in a statement after it cut Ghana's rating to B from B-plus. It said the outlook was stable.

"The authorities continued to overrun on wages, interest costs and arrears, leading Fitch to expect that the government will fail to meet the 9 percent of GDP (gross domestic product) fiscal deficit target for this year," the rating agency added.

Central bank Governor Henry Kofi Wampah told Reuters after the Fitch statement that Ghana will keep monetary policy tight and expects increased inflows from oil and gas production to help stabilise its finances  in early 2014.

"The combination of monetary policy and increased flows from the external sector as well as the fiscal consolidation going forward are factors that we believe will normalise the situation and ease pressure on the markets," he told Reuters by telephone.
Concerns about economic management in the country of 25 million people grew in February when the government of President John Mahama announced the 2012 budget deficit reached 12.1 percent of GDP, nearly double its target.

Moody's Investors Service rates Ghana B1 with a stable outlook. Standard & Poor's rates Ghana B, also with a stable outlook.
Ghana's cedi currency, which has weakened almost 14 percent this year, held steady on Thursday at 2.1750 to the dollar, according to a Standard Bank trader. The Ghana Stock Exchange remained flat, according to dealers.

Source .REuters

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