Moody's Ratings upgraded Ghana's sovereign credit rating citing an improvement in domestic conditions that has led to a reduction in financing costs and a meaningful improvement in debt affordability.

The West African nation's credit rating was boosted one level to B3 from Caa1. The outlook was revised to stable from positive.

Financing costs have remained lower despite external headwinds from the conflict in the Middle East, which Moody's said reflects fiscal discipline, institutional improvements and favorable export prices.

The rating incorporates credit constraints including susceptibility to terms-of-trade volatility and exchange rate depreciation, relatively low government revenue generation and weak but improving policy effectiveness, the agency said.

That is balanced by a more moderate debt burden, a history of financing support from multilateral creditors and a track record of political stability.

Moody's expects Ghana's stability and reduced government liquidity risks will be sustained, in part by favorable domestic bond market dynamics. ill