Ghana could secure another sovereign credit-rating upgrade if the government maintains spending discipline, strengthens revenue mobilisation and demonstrates that recent economic gains can be sustained over the long term, Moody’s Ratings has indicated.
The assessment offers a positive signal for Ghana’s economic recovery following the 2022 debt crisis and subsequent debt restructuring. However, it also makes clear that further progress will depend on the government’s ability to maintain fiscal discipline, strengthen public institutions and protect the economy against future shocks.
Moody’s recently upgraded Ghana’s long-term foreign- and local-currency issuer ratings to B3 from Caa1, while revising the outlook to stable from positive. The agency also upgraded the country’s foreign-currency senior unsecured debt rating and its foreign- and local-currency medium-term note programme ratings.
The upgrade reflects improvements in domestic financing conditions, lower government borrowing costs and efforts to restore macroeconomic stability. However, Ghana remains below investment grade, meaning investors still face significant risks when lending to the country.
Moody’s has indicated that another upgrade would require a longer record of disciplined government spending, sustained improvements in revenue collection and stronger evidence that fiscal policies are delivering lasting results. Progress in addressing other financial risks would also improve the country’s credit outlook.
The key issue is whether Ghana can maintain its current gains beyond the immediate recovery period. Improved economic indicators may strengthen confidence in the short term, but creditors will want evidence that the country has addressed the weaknesses that contributed to its debt crisis.
One of the main factors supporting the latest upgrade is the reduction in domestic borrowing costs. Lower interest rates on government securities can ease pressure on public finances by reducing the cost of servicing newly issued debt.
This could create additional room for spending on infrastructure, education, healthcare and social protection. However, lower borrowing costs do not eliminate Ghana’s existing debt obligations or the refinancing pressures it faces in the coming years.
There is also a risk that improved financing conditions could encourage excessive government spending. If the administration increases expenditure without a corresponding rise in revenue, the resulting pressure on public finances could undermine the progress that has supported the rating upgrade.
Moody’s stable outlook reflects this uncertainty. Although Ghana has made enough progress to justify a higher rating, the agency wants to see a more consistent record of sound economic management before another upgrade can be considered.
A major test will be the government’s ability to maintain fiscal discipline after the country’s IMF-supported programme comes to an end. During an adjustment programme, spending controls and external monitoring can help governments maintain financial discipline. Sustaining those measures without the same level of external oversight requires stronger institutions and a lasting commitment to fiscal responsibility.
For Ghana, this means controlling expenditure, preventing the accumulation of arrears, strengthening procurement systems and ensuring that public institutions do not create financial obligations that are hidden from the national accounts.
Fiscal rules must also be enforced consistently. Regulations that are frequently ignored or weakened when political pressures arise will do little to reassure investors and credit-rating agencies.
The challenge will become particularly important as the government pursues its “New Economy” agenda, which aims to accelerate investment, create jobs and transform the economy. While these goals are essential to Ghana’s development, the government must ensure that its spending ambitions do not recreate the fiscal imbalances that contributed to the country’s economic difficulties.
The issue is not whether Ghana should invest in development, but whether public spending is properly prioritised and produces meaningful economic returns.
Revenue mobilisation is another critical condition for a possible upgrade. Ghana has long struggled to generate sufficient domestic revenue to meet its development needs, with tax compliance challenges, informality, exemptions and administrative weaknesses limiting the amount collected.
Reducing expenditure alone will not provide a sustainable solution. Excessive spending cuts could weaken public services, delay infrastructure maintenance and undermine economic growth. The government must therefore combine prudent spending with a more efficient and reliable revenue system.
This will require broadening the tax base, improving digital tax administration, reducing revenue leakages and reviewing exemptions that do not deliver clear economic benefits. Simply imposing additional taxes on businesses and individuals already within the formal tax system could discourage investment and weaken compliance.
Stronger domestic revenue would also reduce the government’s dependence on short-term borrowing and ease competition between the state and private businesses for available funds. This could help create better conditions for private-sector lending, investment and job creation.
Moody’s has also identified stronger external buffers as an important factor that could support another rating upgrade. For Ghana, this means building and maintaining sufficient foreign-exchange reserves to withstand external shocks and meet international obligations.
The country remains vulnerable to fluctuations in gold, cocoa and oil prices, changes in global interest rates and increases in energy costs. Although favourable commodity prices can support export earnings and government revenue, these benefits can weaken when conditions in international markets change.
Recent pressure on the cedi further highlights the importance of maintaining adequate reserves. While foreign-exchange interventions can help manage instability, the Bank of Ghana needs sufficient reserves to support essential imports and meet external payment obligations when necessary.
Building stronger reserves will require reliable export earnings, investment inflows and remittances rather than excessive reliance on borrowed foreign exchange.
Moody’s has also warned that Ghana’s rating could come under pressure if financing conditions deteriorate significantly or the government’s commitment to fiscal consolidation weakens. Such developments could increase refinancing risks, raise borrowing costs and undermine confidence in the country’s economic management.
A severe external shock that leads to a sustained decline in foreign-exchange reserves could also threaten macroeconomic stability and weaken the government’s ability to service foreign-currency debt.
Higher global energy prices, falling commodity earnings or renewed domestic spending overruns could compound these risks, placing additional pressure on the cedi, inflation and public finances.
The government’s task is therefore to build adequate fiscal and foreign-exchange buffers before such challenges emerge.
The latest upgrade could improve investor confidence and strengthen Ghana’s prospects of gradually regaining access to international capital markets. However, the B3 rating does not mean the country has returned to the position it occupied before the debt crisis. Ghana still has considerable work to do to rebuild its creditworthiness and restore confidence after its debt restructuring.
Moody’s assessment ultimately places the emphasis on consistency. Another upgrade will depend on whether the government can maintain spending discipline, improve revenue collection without undermining economic activity and strengthen external reserves.
Ghana has made progress in moving away from the depths of its economic crisis, but sustaining that recovery will require more than favourable market conditions and improved fiscal figures. The country must demonstrate that responsible economic management can withstand political pressures and remain in place over time.
