Nigeria and Ghana have earned significant votes of confidence from the international financial community, as major global credit rating agencies upgraded their sovereign credit ratings. For Nigeria, its rating went up a notch to B3 from Caa1 due to significant improvements in the country’s external and fiscal positions, according to one of the international rating agencies.

In May 2025, the World Bank said that Nigeria’s economy achieved its fastest growth in about a decade in 2024, driven by a strong fourth quarter and an improved fiscal position. The recent overhaul of Nigeria’s foreign exchange management framework, according to reports, has markedly improved the balance of payments and bolstered the CBN’s (Central Bank of Nigeria) foreign exchange reserves.

For Ghana, a major global credit rating agency has upgraded the country’s foreign-currency sovereign credit rating from Selective Default (SD) to CCC+, reflecting cautious optimism about Ghana’s economic direction and reform agenda.

From the Brink to Recovery

In recent years, Ghana’s economy has faced considerable strain, marked by high debt levels, rising inflation, and a depreciating currency. However, the recent upgrade signals a turnaround, largely due to progress in restructuring external debt and stabilizing core macroeconomic indicators. According to the rating agency, Ghana is nearing an agreement with commercial creditors—a crucial step toward restoring fiscal sustainability.

Reform-Driven Progress

Under the leadership of Finance Minister Dr. Cassiel Ato Forson, Ghana has launched a series of structural reforms aimed at boosting transparency and enforcing fiscal discipline. Key initiatives include:

• Amendments to the Public Financial Management Act
• Reinstatement of fiscal rules to guide spending and borrowing
• Steps toward creating an independent fiscal council

These reforms align with Ghana’s commitments under the IMF Extended Credit Facility program and are focused on building long-term institutional resilience.

Instead of relying on tax hikes, the government is pursuing expenditure-led consolidation. This strategy aims to cut wasteful spending while protecting key social programs. The target: a primary budget surplus of 1.5% of GDP in 2025, with annual public spending increases capped below 10% over the next four years—a stark contrast to the 28% average between 2000 and 2020.

A Signal to Global Markets

While the upgrade comes with a cautious tone, the rating agency acknowledged several positive developments:

• Strengthened external accounts
• Commitment to consistent economic reform
• A stable medium-term growth outlook

Risks remain, including potential overspending ahead of elections and vulnerabilities linked to global market volatility. Still, the improved rating marks a significant shift in investor sentiment and reflects confidence in Ghana’s policy direction.

Broader Lessons for the Region

Ghana’s upgrade is not just a national milestone but a case study for other African nations dealing with similar debt burdens. Key takeaways include:

• Timely, transparent debt restructuring restores investor confidence.
• Legal and institutional reforms support long-term fiscal stability.
• Balancing fiscal responsibility with development goals sustains public trust.

These strategies are not universally applicable, but Ghana’s example shows that measured, credible reforms can pave the way for renewed financial credibility. The upgrade is not an endpoint but a reminder: credibility is earned gradually and maintained through continuous effort.

Adapted from: International Credit Rating Agency Report (May 9, 2025); Ghana Ministry of Finance, 2025 Budget Statement; Ghana Statistical Service and Bank of Ghana Reports, Q1 2025.