Professor of Finance and Economics at the University of Ghana, Godfred Bokpin, has cautioned that Ghana’s recent improvement in credit ratings reflects tough fiscal tightening rather than tangible economic relief for citizens.
His remarks follow a decision by Fitch Ratings to upgrade Ghana’s Long-Term Foreign-Currency Issuer Default Rating from ‘B-’ to ‘B’, assigning the country a Positive Outlook.
Fitch attributed the upgrade to several improving macroeconomic indicators, including a sharp decline in public debt, strengthened fiscal discipline, robust economic growth, appreciation of the cedi, and a notable rise in international reserves.
The agency further projected that Ghana’s public debt could fall to 46 percent of Gross Domestic Product (GDP) by 2027—below the average for countries with comparable credit ratings.
Speaking on Citi News, Prof. Bokpin said the upgrade was expected, noting that government policy has been deliberately structured to meet the benchmarks used by international rating agencies.
“We had expected this, so I am not surprised. In fact, as of October last year, Ghana had made significant progress on many of those rating indicators,” he said.
According to the economist, the government’s approach has centred on aggressive expenditure cuts aimed at improving fiscal balances and reducing debt levels.
He contrasted this with previous administrations, which tended to prioritise revenue mobilisation while maintaining spending levels. The current strategy, he explained, reflects a shift toward expenditure-based fiscal consolidation.
While acknowledging that such measures can quickly improve macroeconomic indicators, Prof. Bokpin warned that the gains come at a cost.
“When you switch to expenditure-based fiscal consolidation, in the immediate, your books may look good, and the numbers may look very appealing, but you have sacrificed so much,” he stated.
Prof. Bokpin cautioned that reduced government spending—particularly on infrastructure and key development sectors—could have adverse implications for economic growth over the medium to long term.
He stressed that while improved credit ratings may enhance investor confidence and external perception of the economy, policymakers must balance fiscal discipline with sustained investment to ensure broader economic resilience and improved living conditions.