Fitch downgrades Ghana to further ‘junk’ status - www.asempanews.com

The downgrade, it said, reflects the increased likelihood that Ghana will pursue a debt restructuring given mounting financing stress, with surging interest costs on domestic debt and a prolonged lack of access to Eurobond markets.

“There is a high likelihood that the International Monetary Fund support programme currently being negotiated will require some form of debt treatment due to the climbing interest costs and structurally low revenue as a percentage of Gross Domestic Product”.

The rating agency added interest costs on external debt are lower than for domestic debt and near-term external debt amortisations appear manageable.

“However, we believe there could be an incentive to spread a debt restructuring burden across domestic and external creditors and therefore do not have a strong basis to differentiate between Foreign- and Local-Currency ratings at this time”

High debt service, financing constrained

Interest payments on domestic debt also hovered around 75% of total interest costs.

“We estimate Ghana faces around $3 billion of external debt service costs in 2023, including amortisation and interest”, it added.