International ratings agency, Moody’s has projected dire consequences for African economies amid the COVID-19 pandemic.

It says the global shock is having a severe macroeconomic and financial impact on African countries.

In a new report which did not constitute a ratings action, Moody’s said the global shock will significantly constrain regional growth despite the numerous fiscal and monetary stimulus measures announced by a number of African governments and central banks.

David Rogovic, a Moody's Senior Analyst and co-author, said while the number of coronavirus infections in Africa is considerably lower than elsewhere, it is increasing.

"To avoid a widespread pandemic that would overwhelm Africa's generally less-developed healthcare sectors and add to the fiscal cost through higher health spending, several governments have closed borders and instituted lockdowns to prevent the virus' spread," he emphasised.

The report foresees that the combined effect of border closures, global trade disruption, commodity price declines and financial market volatility related to the coronavirus pandemic will weaken credit conditions for many African sovereigns.
Already, most African countries fiscal position have weakened.

At the same time, declining export revenue is expected to increase pressure on the balance of payments and aggravate external vulnerability of countries.

Government liquidity risk will also be exacerbated given financial market dislocation and investor aversion towards weaker debt issuers.

In January 2020, Moody’s affirmed the Government of Ghana's long-term issuer and senior unsecured bond ratings at B3 and changed the outlook to positive from stable.

It also concurrently affirmed the rating of the bond enhanced by a partial guarantee from the International Development Association (IDA, Aaa stable) at B1.

The decision to assign a positive outlook Moody's said reflected rising confidence that the country's institutions and policy settings will foster improved macroeconomic and fiscal stability over the medium term.