LONDON, March 16 - Ratings agency Standard & Poor's cut its outlook for Ghana on Monday to negative on a deteriorating macroeconomic picture, the latest African rating to come under pressure as the global economic crisis hits.

Fellow ratings agency Fitch took the same step with the West African cocoa and gold producer earlier in the month.

Both blamed a mixture of external shocks and loose budget management by the previous government outweighing upcoming oil production in a country that until very recently had been seen as one of Africa's most promising frontier markets.

Along with oil producer Gabon, Ghana became one of the first two sub-Saharan African countries outside South Africa to successfully issue a Eurobond in 2007 to good investor demand -- but the credit crunch has again cut off such options.

The government of President John Atta Mills, elected just over two months ago, is facing a cash crunch after spending soared in the final year of the previous government, pressuring the cedi currency and unnerving investors.

"The negative outlook reflects the likelihood of a downgrade if the planned fiscal correction is not fully implemented or debt financing challenges intensify in the context of shallow domestic market and we can global risk appetite," S&P said in a statement.

S&P rates Ghana as B+ on its long-term and B on its short-term rating, and had previously had the country on a stable outlook. It said the rating was still supported by the prospect of significant oil production volumes by 2011.

It said it expected central government debt to rise above 60 percent of gross domestic product in 2009-10, welcoming commitments from Ghana's new government to correct economic imbalances.

CRUNCH HITS AFRICA

It warned that high interest rates, slumping external demand and faltering private remittances could lead to growth falling to 3-4 percent over the next two years.

A government spokeswoman said shortly after the election that overspending by their predecessors had left the country "broke" -- although officials then pledged that they intended to honour the country's commitments.

The fledgling stock exchange <.GHAGH> had been one of the best performing emerging markets, but has fallen steadily since October -- with analysts saying lack of liquidity was making it difficult for foreign investors to get out.

The World Bank said last week it would extend up to $1.2 billion in interest-free loans to garner over three years to fund a range of sectors and help weather the crisis.

The ratings agency had taken similar action with Africa's highest rated sovereign Botswana in February, warning of worsening public finances as the country kept spending roughly constant as revenues from diamond exports dwindled.

Ratings agency Moody's put South Africa's A2 local currency rating on review for possible downgrade last week, citing fiscal pressures and the risk of a prolonged recession.

Tanzania and Zambia, both of which had intended to get their first sovereign ratings in what analysts saw as a first step towards issuing their own Eurobonds, have also suspended such plans, hurt by the global financial crisis.

The head of the African Development Bank Donald Kaberuka said last week the drying up of global credit had made it impossible for any further African countries to issue Eurobonds in the immediate future, damaging key infrastructure building.