Ghana’s Long-Term (LT) Local-Currency (LC) Issuer Default Rating (IDR) has been improved by the international rating agency FitchRatings to “CCC” from “RD”.

After Ghana completes its debt exchange program in February 2023, the ratings on its debt issued in LC are upgraded.

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Fitch, however, saw this transaction as a distressed debt exchange in the context of increased fiscal pressures, lack of access to international financial markets, and interest payments that would account for 54% of revenues in the first half of 2022.

Bonds issued before the domestic debt exchange have two main payments that were due on February 6 and February 20, 2023.

On March 13, 2023, the holders who were either ineligible for the domestic debt exchange or who chose not to participate received the payments that were still owed to them.

According to the Rating, “the upgrading of Ghana’s LTLC IDR follows this resumed payment on LC bonds that remedies the LC debt default.”

Better Liquidity

According to Fitch, Ghana can cut its interest payments in 2023 by almost 10% of anticipated revenues, or 1.6% of GDP, thanks to the domestic debt exchange (GDP).

“The amount of GDP needed for gross financing this year has been decreased by 5%. By 2024, interest payments would be reduced by 0.9% of GDP or 6% of revenues.

Fitch predicts that Ghana’s cash budget deficit in 2023 will drop dramatically to 4.5% of GDP as a result of the domestic debt restructuring and suspension of external debt service.

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