By Rachel Savage
LONDON (Reuters) – An IMF programme that boosts Ghana’s liquidity and access to funding could help improve the West African country’s credit rating, a senior officer with ratings agency Moody’s said on Wednesday.
“If it changes the dynamic of the budget then, yes, we said that could be upward pressure on the rating,” Lucie Villa told Reuters in an interview on the sidelines of The Africa Debate conference in London.
“So we see funding lining up and so on and so forth, where if the liquidity risk was less present or less heightened than now.”
An International Monetary Fund staff mission is visiting Ghana from July 6-13 for initial discussions about a possible programme, as the country struggles amid a widening budget and balance of payments deficit, rising inflation and a weakening currency.
Ghana had previously said it would not seek help from the fund, but announced it would ask for support last Friday after hundreds took to the streets to protest against mounting economic hardships.
An IMF programme could pave the way to more concessionary lending to Accra from multilateral development banks, Villa said.
“Realistically it can’t be them financing a country like Ghana for years, but if it could help them bridge this period when they have (a) large deficit and high borrowing costs, then I can see how a programme could work,” she said.
Ghana’s sovereign bonds fell sharply in February when Moody’s cut its rating from B3 to CAA1, after Fitch had downgraded its rating in January.
Ghana’s bonds have rallied since the government said it would start talks with the IMF, but yields remain above 10% across the curve, the level at which new debt is usually deemed too expensive to issue.
Ghana’s government said on Tuesday that it hoped an IMF programme would have the effect of “resuming… market access sooner than later, facilitating credit rating upgrades”.
(Reporting by Rachel Savage; Editing by Chris Reese and Emelia Sithole-Matarise)
