Ghana walks a tightrope as S&P flags reform risks

By zednewsroom

Ghana’s fragile economic recovery could face renewed pressure if ongoing reforms lose steam, according to a new assessment by S&P Global Ratings.

The ratings agency says the country’s credit profile over the next 12 to 18 months will largely depend on the government’s ability to maintain fiscal discipline while navigating external shocks and concluding its debt restructuring process.

While Ghana’s sovereign ratings remain at ‘B-/B’ with a stable outlook, S&P makes clear that this position is not guaranteed if policy momentum weakens.

“It could lower our rating on Ghana over the next 12–18 months if fiscal reform momentum stalled, materially raising fiscal deficits or debt service costs, while straining the government’s ability to refinance maturing debt as it comes due,” S&P stated.

Reforms at the centre of the outlook

At the heart of S&P’s concerns is the pace of fiscal consolidation. Any reversal, whether through increased spending pressures or rising debt servicing obligations, could quickly erode recent gains and complicate government’s financing strategy.

The warning comes at a time when Ghana is still rebuilding credibility with investors following its 2022 debt default, making consistency in policy execution critical.

Debt restructuring not fully out of the woods

Although Ghana has made substantial progress, completing its domestic debt exchange and restructuring $13.1 billion in Eurobonds, the process is not entirely complete.

S&P notes that outstanding negotiations, particularly under the G20 Common Framework, remain vulnerable to delays, especially if creditor groups fail to agree on comparable terms.

“Although not our base case, we could also consider a negative rating action if the remaining part of debt restructuring stalls,” it added, citing potential disputes over comparability of treatment among creditor groups.

Beyond domestic policy, Ghana’s outlook is also tied to global conditions. The agency warns that weaker export performance or unfavourable commodity prices could quickly reverse gains in the external sector.

This is particularly significant for an economy still heavily reliant on gold and other commodity exports for foreign exchange earnings.

Despite the risks, recent data points to improving macroeconomic conditions. Ghana recorded a current account surplus of $9.35 billion in 2025, equivalent to 8.1 per cent of GDP, while foreign reserves climbed to $14.5 billion.

These gains, largely supported by strong gold prices, have helped stabilise the external sector and rebuild buffers.

S&P says sustaining this trajectory, alongside disciplined fiscal management, could open the door for a positive rating action.

“It could raise the rating in the next 12–18 months if Ghana maintained low fiscal deficits, reducing debt service costs and strengthening its access to foreign financing, while its external position continued to strengthen, including via the accumulation of additional foreign currency reserves,” the agency said.

Overall, the assessment paints a picture of an economy at a critical juncture. Ghana has made measurable progress, but the path forward remains narrow.

Maintaining reform momentum, managing debt obligations, and cushioning against external shocks will be decisive in determining whether the country consolidates its recovery, or faces renewed pressure on its credit standing.