Fitch Ratings has projected that Ghana will exit its sovereign default status by July 2025, assuming the successful finalization of external debt restructuring by June 2025. This optimistic outlook was shared during a recent webinar discussing debt restructuring in Ghana, Zambia, and Ethiopia.
Associate Director of Europe, Middle East, and Africa Sovereign Ratings at Fitch, Thomas Garreau, made it clear Ghana is expecting the completion of the common framework restructuring by the first half of next year, citing the December polls as a delay to the completion process.
Ghana reached an agreement with the Official Creditor Committee (OCC) in January 2024, setting the parameters for official debt treatment. The Eurobond exchange, a critical milestone, was completed in October 2024, contributing significantly to the restructuring process.
The restructuring has addressed approximately $14.2 billion in Eurobonds, including Principal Debt Instruments (PDIs). The associated debt haircut is estimated at 6.2% of Ghana’s Gross Domestic Product (GDP).
Fitch anticipates that Ghana will conclude the restructuring of non-bond debts by the end of 2024, further paving the way for economic recovery. If the current pace of restructuring continues, Ghana is expected to exit sovereign default by mid-2025. This development could restore investor confidence and enhance the country’s fiscal stability.
Successfully navigating the debt restructuring process could bolster Ghana’s economic recovery efforts, improve its creditworthiness, and support sustainable fiscal policies. However, this outcome hinges on the government’s ability to adhere to agreed timelines and effectively manage its fiscal and monetary policies in the interim.
During the restructuring, interest payments have already been reduced by 8% of projected revenues in 2024, 5% in 2025, and 4% in 2026, according to Fitch. Despite the complexity of election-year dynamics in 2024, Fitch’s forecast aligns with Ghana’s ongoing efforts to stabilize its economy.
