Ghana’s debt outlook was lowered to
negative from stable by Fitch Ratings, which said the
government’s policy credibility is at risk from above-target
budget deficits for the past two years.
Ghana’s fiscal deficit last year expanded to 10.8 percent
of gross domestic product, from an estimate of 10.2 percent in
November, as tax revenue declined and spending on wages
increased, according to the Finance Ministry. The gap had
ballooned to 12.1 percent of GDP before elections in 2012,
exceeding the government’s 9 percent target.
“Policy credibility has been significantly weakened
following two years of double-digit and larger-than-expected
budget deficits,” Fitch said in a note today.
Fitch maintained Ghana’s credit rating at B, five steps
below investment grade, after cutting it by one level in
October.
The International Monetary Fund said last month the West
African nation may miss its goal of narrowing the gap to 8.5
percent of GDP this year if action is not taken to boost
sluggish economic growth and tame inflationary pressure.
Fitch said it forecasts a budget deficit of 9.3 percent
this year and 8.2 percent in 2015. Inflation is projected to
average 15 percent in 2014, it said.
The cedi declined 20 percent against the dollar last year
and has fallen a further 12 percent this year, according to data
compiled by Bloomberg. The currency weakened 0.1 percent to
2.6925 per dollar by 4:44 p.m. in the capital, Accra.
To contact the reporters on this story:
Ekow Dontoh in Accra at
edontoh@bloomberg.net;
Moses Mozart Dzawu in Accra at
mdzawu@bloomberg.net
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