Picture: Alessandro Garofalo

Accra - Ratings agency Fitch warned Ghana on Friday that the west African country could face a credit downgrade due to its rising debts and depreciating currency.

The ratings agency downgraded the country's outlook to “negative” from “stable”, citing a budget deficit of 10.8 percent of national output and a 20-percent depreciation of Ghana's currency, the cedi.

“Ghana's large budget deficit is adversely impacting economic stability, with the current account deficit and inflation firmly in double digits,” the ratings agency said in a statement.

Fitch also said it would keep Ghana's debt ratings at “B”.

Viewed as the most stable democracy in a tumultuous region, Ghana has seen rapid economic growth in the past four years, thanks to valuable exports of gold, cocoa and oil, which it began producing in 2010.

But falling gold prices, government overspending and difficulties in raising Ghana's oil production beyond its current level of 100,000 barrels per day have prompted scepticism among investors and lenders.

The International Monetary Fund said last month that the economy in Ghana grew by only 5.5 percent in 2013, a drop from nearly 8.0

percent the year before.

The slowing growth may ultimately jeopardise its ability to pay rapidly down its deficit, said Fitch's director of sub-Saharan Africa research, Carmen Altenkirch.

“In order to bring the budget deficit down, they'll have to work just that much harder.”

There was no immediate comment from Ghana's finance ministry.

Ghana's currency lost 10.6 percent of its value this year alone, a drop that spurred the central bank in February to put new restrictions on the flow of foreign exchange out of the country.

While it praised Ghana for its stable democracy and relatively easy business climate, Fitch said the country was unlikely to meet its deficit reduction targets for this year.

The country also missed similar targets in 2013 and the continued inability to control its finances may rattle investors, Altenkirch said.

“It certainly does raise concerns about whether or not, for example, one will see the same revenue performance and overspending in 2014,” she said. - Sapa-AFP