S&P's Ghana Sovereign Debt Downgrade to B Was `Questionable', IMF Says

Standard & Poor’s downgrade of Ghana’s sovereign rating to five steps below investment grade was “questionable,” said Mohammad Jafar Mojarrad, the International Monetary Fund’s executive director for Ghana.

Concerns over Ghana’s fiscal deficit and lack of clarity on oil-industry laws were cited by S&P in lowering the country’s rating to B, from B+, on Aug. 27, while maintaining a stable outlook. The deficit may be “around 8.5 percent” of gross domestic product in 2010, analyst Ravi Bhatia said. That’s higher than the government’s projection of 7.5 percent.

Ghana is “committed to meeting the target they have set in the budget,” the Washington-based fund’s Mojarrad told reporters today in the capital, Accra.

Deputy Finance Minister Seth Terkper said yesterday Ghana’s “austerity program” is on track to meet the target and said laws to govern the country’s nascent energy industry will be passed before oil production begins in December.

Ghana will become Africa’s newest oil producer when crude from its Jubilee field starts flowing later this year. Output is expected to be 120,000 barrels a day by 2011.

To contact the reporter on this story: Moses Mozart Dzawu in Accra at mdzawu@bloomberg.net.

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