Fitch upgrades Ghana’s local currency IDR to ‘CCC’

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Ghana’s Long-Term (LT) Local-Currency (LC) Issuer Default Rating (IDR) has been raised by Fitch Ratings to “CCC” from “RD”. Also raised from “D” to “CCC” are the issue ratings for domestically issued local-currency bonds that have not yet reached maturity.

Ghana’s Long-Term Foreign-Currency (FC) IDR has been confirmed by Fitch at “RD”. Generally speaking, Fitch does not give Outlooks to sovereigns with ratings of “CCC+” or lower.

The rating action commentary concludes with a complete list of rating actions.

Due to the notes’ expiration, the issue ratings on local-currency notes with domestic issue dates that had a maturity date of 6 February 2023 and for which the final due principal payments were received on 13 March 2023 have been withdrawn.

Domestic Debt Exchange Completed: Following the Republic of Ghana’s completion of its domestic debt exchange program, which will take effect on February 21, 2023, the ratings on its debt issued in local currency (LC) have been upgraded. With interest payments accounting for 54% of revenues in 1H22 and limited access to international capital markets, Fitch saw this transaction as a distressed debt exchange taking place in the midst of increased fiscal pressure.

Resumption of LC Bond Payments: Bonds issued prior to 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. With this resumed payment on LC bonds, which ends the LC debt default, Ghana’s LTLC IDR is upgraded.

Improved Liquidity: According to Fitch, Ghana can cut its interest payments in 2023 by around 10% of anticipated revenues, or 1.6% of GDP, thanks to the domestic debt exchange. Of the 2023 GDP, the gross finance needs for this year have been decreased by 5%. Interest payments would be reduced by 0.9% of GDP, or 6% of revenues, in 2024.

According to Fitch’s projections, 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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