Fitch has downgraded Ghana’s Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) to ‘CC.’
Ghana moved from ‘CCC’ to ‘junk’ in the most recent ratings.
It has downgraded Ghana’s credit worthiness for the second time in 2022.
According to Fitch, the rating reflects the increased likelihood that Ghana will pursue debt restructuring due to mounting financing stress, including rising interest rates 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”.
“We believe this will be in the form of a debt exchange and will qualify as a distressed debt exchange under our criteria”, it explained.
Fitch added that 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”.