External Debt Restructuring: Fitch anticipates conclusion to negotiations with creditors in second half of 2024
Fitch Solutions has shed light on Ghana’s prospects of reaching a debt deal with its external creditors, with expectations pointing towards the second half of 2024.
Nonetheless, Fitch Solutions cautions that any potential stagnation or hurdles in the external debt restructuring negotiations could have adverse consequences. Such an impasse would likely trigger a weakening of investor sentiment towards Ghanaian assets, potentially leading to renewed currency depreciation.
In turn, this scenario could result in elevated inflation persisting for an extended duration and prompting the central bank to adopt a more stringent monetary stance than previously assumed in their baseline forecast.
As of April 2023, Ghana’s external debt reached $29.3 billion (equivalent to around ¢321.4 billion), indicating a slight uptick from the previously reported figure of $29.0 billion (about ¢240.9 billion) in December 2022.
The nation’s current efforts to alleviate approximately $10 billion in external debts are part of the broader restructuring of its external debt portfolio, which amounts to $29.3 billion.
In tandem with external debt challenges, Ghana’s domestic debt situation has also escalated, with domestic debt surging to ¢247.9 billion as of the end of April 2023, accounting for approximately 30.9% of the Gross Domestic Product (GDP).
Moreover, Ghana’s overall public debt has scaled new heights, reaching an unprecedented GHS 569.3 billion in April 2023, equivalent to a staggering 71.1% of the country’s GDP, as reported by the Bank of Ghana.
In dollar terms, Ghana’s total debt stock now stands at a considerable $52 billion, underscoring the magnitude of the country’s debt burden and the pressing need to address the external debt restructuring to alleviate fiscal and economic strain.
As the debt saga unfolds, market participants and investors remain watchful of developments, cognizant of the potential implications on Ghana’s economic stability and prospects for the future.
