According to Fitch, inflation will reach its high in the third quarter of 2022 before dropping down through the year’s conclusion.
According to Fitch, yearly average inflation would reach 22% in 2022 before dipping to 16% in 2023.
According to the Ghana Statistical Service (GSS), the national year-over-year inflation rate was 31.7% in July 2022, up 1.9 percentage points from the 29.8% recorded in June 2022.
Additionally, the rating agency lowered Ghana’s Issuer Default Rating (IDR) for Long-Term Foreign-Currency (LTFC) from “B-” to “CCC”.
The downgrade, in the opinion of Fitch, is due to the deterioration of Ghana’s public finances, which has resulted in a protracted absence of access to the Eurobond markets and, in turn, a sharp reduction in external liquidity. By the end of 2022, foreign reserves will be less than two months’ worth of current external payments (debits in the current account) absent fresh external funding sources.
coverage rate
The main policy rate was increased twice in 2022 by a total of 450 basis points to 19% by the Monetary Policy Committee (MPC) of the BoG.
If inflation does not reach its peak as expected, the central bank may boost the policy rate once again, according to Fitch.
The rating agency stated that “a higher policy rate would presumably be communicated to domestic yields, putting more pressure on the government’s domestic borrowing costs.”
