Fitch puts Ghana on downgrade watch

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 ouput 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 growth of gross domestic product 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 a jump of nearly 8.0 percent in GDP in 2012.

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

While it praised Ghana for its stable democracy and relatively easy business climate, Fitch warned that the country's slowing growth could harm efforts to reign in government spending.

"Ghana's weaker growth outlook over the next two years will complicate fiscal consolidation," the agency said.