Fitch Rates Economic Outlook Negative

Global rating agency Fitch has affirmed Ghana’s Long-term foreign and local currency Issuer Default Ratings (IDR) at ‘B’ with negative outlooks.

It also affirmed Ghana’s Short term foreign currency IDR at ‘B’ and Country Ceiling as well at ‘B’.

This, according to Fitch, was as a result of the recent Eurobond (USD1bn) and the annual Ghana Cocoa Board syndicated loan (USD1.7bn) that have alleviated some short-term pressures on reserves and the currency.

However, it said a lasting reduction in funding pressures for both the fiscal and current account deficits is unlikely until an International Monetary Fund (IMF) programme is agreed and a credible deficit reduction strategy implemented.

The government began talks with the IMF in mid-September over a fund programme.

However, Fitch expects negotiations to be protracted with a deal expected next year.

“Government will probably seek IMF’s endorsement for the country’s ‘home-grown’ strategy, but given its recent track-record, may find the IMF’s likely suggestion of faster fiscal consolidation challenging.

“Notwithstanding these risks, Fitch expects a programme will likely
be agreed,” the rating agency said.

The supplementary budget announced in July projected the budget deficit in 2014 to widen to 8.8 percent of Gross Domestic Product (GDP) from 8.5 percent.

Fitch forecast a deficit of 10.1 percent of GDP for 2014 as a result of government’s challenge in curtailing current expenditure and arrears, while boosting revenue.

It said the magnitude of fiscal consolidation in the coming years will depend on the path of deficit reduction agreed with the IMF

Source: Daily Guide

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