Fitch predicts that general government debt would fall to 87% of GDP by the end of 2023, down from 89% in 2022.
According to Fitch, this is because the Bank of Ghana took a 50% haircut on its non-marketable loan holdings, which translates to a debt reduction of 4.2% of projected GDP for 2023.
The primary deficit and a 33% annual cedi devaluation from the end of 2022 are expected to somewhat offset this, according to the rating agency.
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“Assuming a 30% haircut on external debt considered for the restructuring, year-on-year cedi depreciation of 20% in 2024 and 9% in 2025 and a GDP deflator of 21% and 10% respectively, public debt would fall to 78% by 2025, although there is a high degree of uncertainty surrounding the definitive external debt restructuring parameters,” Fitch said while announcing an upgrade of Ghana’s Long-Term Local-Currency Issuer Default Rating (IDR) to ‘CCC’ from ‘RD’, suggesting that Ghana’s economic and financial situation may have improved slightly.
Fitch Ratings has also confirmed Ghana’s Long-Term Foreign-Currency IDR of ‘RD’ and the Country Ceiling of ‘B-‘. Fitch has granted ‘CCC’ ratings to two interest-only notes issued in connection with the fulfilment of pension funds’ domestic debt exchange holdings. Fitch has also assigned ‘CCC’ ratings to four domestic US dollar-denominated bonds issued on 4 September 2023.
