IMF Bailout: Ghana to restructure debt as interest costs surge – Fitch

Fitch Ratings has said Ghana’s high level of credit risk following the downgrade to CC reflects the increased likelihood that Ghana will pursue a debt restructuring as interest costs surge.

This according to Fith is possible given mounting financing stress, with surging interest costs on domestic debt and a prolonged lack of access to eurobond markets.

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“There is a high likelihood that the IMF 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 GDP,” Fitch said when it lowered Ghana’s long-term issuer default rating to CC on Friday.

The most recent IMF debt sustainability analysis, conducted in 2021, found Ghana at a high risk of debt distress and vulnerable to shock to market access and high debt servicing costs.

Interest costs have risen substantially since then.

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Fitch Ratings has downgraded Ghana’s Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) to ‘CC’, from ‘CCC’.

Fitch typically does not assign Outlooks to issuers with a rating of ‘CCC’ or below.

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