U.S.-Based Finance Professor Highlights 5 Benefits of Recent Rating Upgrade, But Not Without Caution

U.S.-based finance expert Professor Pat Obi at thePurdue University Northwest has outlined key potential gains that Ghana stands to benefit from the recent credit ratings upgrade, but urges continued reforms and vigilance against global risks.

Ghana’s recent credit rating upgrade by Fitch Ratings, from Restricted Default to B- with a Stable Outlook, has heightened hopes about Ghana’s economic trajectory.

In a detailed analysis for The High Street Journal, Prof. Obi outlined several important benefits the upgrade could unlock for Ghana’s economy.

Cheaper Financing

At the top of the list is cheaper financing. “With a better credit rating, Ghana can borrow at lower interest rates,” he explained. He says this could reduce the cost of financing infrastructure and social development projects, and also help refinance existing debt under better terms.

Boost Investor Confidence

He added that such an improvement in credit standing is likely to capture the attention of foreign direct investors, particularly those interested in sectors like energy, mining, and infrastructure. “It signals that the country is getting its fiscal house in order,” Prof. Obi said, noting that this could lead to increased capital inflows and job creation.

Macroeconomic Stability

Another potential benefit is the reinforcement of macroeconomic stability. Ghana has recorded declining inflation. The rate is now closer to 18% from a high of 23%, along with a stronger currency and improved public financial management. These gains, according to Prof. Obi, provide “hope to both citizens and businesses” and could restore confidence in the economy.

Possible Lower Cost of Loans

He also pointed to the possibility of lower lending rates for businesses and consumers if financial institutions respond positively to macroeconomic improvements. “The Bank of Ghana’s current lending rate is around 28%, while inflation is about 18%. That 10% gap poses a real challenge, especially for small businesses,” he observed. Should interest rates adjust downward in line with inflation, access to credit could improve and reduce the cost of doing business.

More Jobs and Income

In the medium to long term, these changes could contribute to more jobs and higher incomes. As borrowing becomes cheaper, businesses may expand operations, creating employment and enhancing productivity. “That’s where the real impact lies translating macro stability into better livelihoods,” Prof. Obi emphasized.

The Caution

Despite this promising outlook, he was careful to inject a note of caution. “Ghana still spends about 25% of its revenue on interest payments alone,” he warned. “That remains a heavy burden, and a clear sign that structural fiscal challenges have not disappeared.”

He also noted that external risks such as global commodity price shocks, geopolitical tensions, and trade disputes, particularly those led by major economies like the United States, could derail progress if not managed carefully.

Nevertheless, Prof. Obi remains hopeful. “This upgrade is a strong signal that Ghana is heading in the right direction. If we stay the course on reforms and guard against external shocks, the future could be bright.”

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