By Joshua AMLANU & Ebenezer NJOKU
Fitch’s recent upgrade of Ghana’s Long-Term Foreign-Currency Issuer Default Rating from ‘Restricted Default’ to ‘B-minus’ is a welcome, albeit expected, development. But the country remains in speculative-grade territory and must intensify reforms to exit the danger zone, Courage Boti, Manager-Macroeconomic Research, GCB Bank, has said.
Speaking to B&FT following the upgrade, Mr. Boti said it was anticipated – given Ghana’s recent macroeconomic improvements and resolution of key external debt issues.
“Looking at the trajectory of events, it was clear from that they were going to upgrade Ghana. There is a general improvement in the macro fundamentals, the cedi’s behaviour has been relatively stable and there has been a meaningful shift in policy direction,” he stated.
Fitch said its decision reflects progress in restructuring the Eurobond and bilateral debts, with US$13.1billion in Eurobond obligations restructured in October 2024 and a US$5.1billion memorandum of understanding on bilateral official debt concluded in January 2025.
The agency estimates that just US$700million in external debt remains unresolved and is unlikely to affect the overall rating trajectory.
Despite the positive momentum, Mr. Boti stressed that Ghana remains far from reclaiming full market confidence. “It is not a big upgrade – we are still just a notch above our previous status and there is a long way to go before we are in a position of comfort. The work needs to continue until we completely come out of the woods,” he explained.
Fitch highlighted government’s policy execution and macroeconomic reforms as key drivers of the upgrade. However, the agency also pointed to fiscal risks. The primary fiscal deficit widened to 3.9 percent of Gross Domestic Product (GDP) in 2024, up from 0.2 percent in 2023 on account of election-year spending. While government had projected a 0.5 percent surplus, Fitch warned that expenditure pressures may have been understated and arrears remain under review.
The new administration is targetting a primary surplus of 1.5 percent of GDP in 2025. Fitch forecasts a more conservative 0.5 percent surplus in 2025, rising to 0.9 percent in 2026. Mr. Boti agrees that such surpluses are critical to sustaining debt sustainability and recommends firm expenditure control going forward.
Public debt is expected to decline to 60 percent of GDP in 2025 and hold steady in 2026, falling from 72 percent in 2024 and a peak of 93 percent in 2022. According to Mr. Boti, this marks important progress but should not lead to complacency. “We must continue to rebuild our buffers and improve domestic resource mobilisation,” he advised.
Fitch estimates foreign-currency debt service at 1.2 percent of GDP in 2025 and 1.4 percent in 2026, with interest payments making up roughly one-third of these obligations. Domestic debt service remains elevated, with 3.8 percent of GDP due in 2025 and 3.9 percent in 2026 – almost entirely from interest payments. Treasury bond repayments are projected to increase to 2.2 percent of GDP in 2027 as instruments under the Domestic Debt Exchange Programme (DDEP) begin to mature.
The interest-to-revenue ratio – a key indicator of debt burden – is expected to remain high at 26 percent in both 2025 and 2026. While this is an improvement from the 48 percent peak in 2021, Mr. Boti pointed out that the figure remains well above the median for similarly rated peers and highlights a need for tighter fiscal control.
He also warned against any premature return to the international capital markets. “We are not in default, so technically we can go to market. But at the current ratings, borrowing costs would be prohibitive – possibly close to 10 percent for a five- or ten-year bond. I do not think any issuer wants to lock in that rate for the long-term,” he noted.
Instead, he urged policymakers to focus on strengthening domestic fundamentals before seeking external finance, stating: “Let us rack up the ratings to a level that is comfortable and build on strong domestic indicators. That is when you can enter the market and raise cheaper funding”.
Fitch’s economic projections show cautious optimism as inflation is expected to ease from 23 percent in 2024 to 15 percent in 2025 and 10 percent in 2026. Real GDP growth is projected to moderate from 5.7 percent in 2024 to 4 percent in 2025 and 4.5 percent in 2026. The current account surplus is forecast to narrow from 4.3 percent of GDP in 2024 to 1.1 percent in 2026, while reserves are expected to increase and cover 3.9 months of current external payments by 2026.
The rating action was underpinned by Fitch’s proprietary Sovereign Rating Model, which assigned a baseline rating of ‘B-minus’ with no additional qualitative adjustments.
