Latest News

EconomyTue, 18 Jan, 22

Fitch Downgrades Ghana's Proposed USD Bonds 'B-' Rating

Fitch Downgrades Ghana's Proposed USD Bonds 'B-' Rating

Fitch Ratings has downgraded Ghana's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'B-' from 'B'. The Outlook for January 2022 is Negative.

The downgrade of Ghana's IDRs and Negative Outlook reflect the sovereign's loss of access to international capital markets in Q2-2021, following a pandemic-related surge in government debt.

This comes in the context of uncertainty about the government's ability to stabilise debt and against a backdrop of tightening global financing conditions.

“In our view, Ghana's ability to deliver on planned fiscal consolidation efforts could be hindered by the heavier reliance on domestic debt issuance with higher interest costs, in the context of an already exceptionally high interest expenditure to revenue ratio.

“Ghana has sufficient liquidity and other available external financing options to cover near-term debt servicing without Eurobond issuance. However, there is a risk that non-resident investors in the local bond market could sell their holdings, particularly if confidence in the government's fiscal consolidation strategy further weakens, placing downward pressure on its reserves,” Fitch Ratings stated.

Ghana's effective loss of market access to international bond markets increases risks to its ability to meet medium-term financing needs. However, Fitch assumes that Ghana will be unable to issue on international capital markets in 2022 and prospects for doing so in 2023 are uncertain. 

The country’s international reserve position has become highly reliant on annual Eurobond issuance. Moreover, as of July 2021, non-resident investors held just below 20% (USD5.8 billion) of Ghana's outstanding domestic government debt. While the maturity of these holdings is long-term, an outflow would put additional downward pressure on Ghana's reserves.

“We forecast that Ghana will face approximately USD2.7 billion (3.3% of GDP) in sovereign external interest service and amortisation payments in 2022. We believe that the government can meet its external debt servicing without market access given its reserves, which we estimate at USD7.9 billion at end-2021 (3.2 months of current external payments).

Though reserves were bolstered by USD3 billion in Eurobonds in 2Q21, which helped the government to meet its approximation of USD3.5 billion (4.7% of GDP) in sovereign external debt servicing costs last year, Fitch forecasts the general government fiscal cash deficit to narrow to 9.1% of GDP in 2022.

Fitch believes that Ghana will achieve moderate medium-term fiscal consolidation, but that the government's forecasts are overly optimistic and predict a much higher GDP of over 9.5% for 2022.

Fitch however expects post-pandemic growth recovery to keep GDP growth potential around 5%.  Though the number of Covid-19 cases has increased dramatically in January because of the Omicron wave, hospitalisations and deaths remain below previous waves.

Source: Abdul-Razak Mohammed (Real Estate Times Africa)

Welcome, Today is Thu, 28 Mar, 2024

Latest Publication

 The Market

  • Bank

  • Rate

  • Tenure

  • Ecobank

  • 23%

  • Fidelity Bank

  • 22%

  • First National Bank

  • 23%

  • Republic Bank

  • 22%

  • 10yrs

  • Stanbic Bank

  • 20.30%

  • Cement

  • Weight

  • Price

  • Cimaf

  • 50kg

  • GHS 47.00

  • Dangote

  • 50kg

  • GHS 50.00

  • Diamond

  • 50kg

  • GHS 48.00

  • Ghacem

  • 50kg

  • GHS 50.00

  • Pozzolana

  • 50kg

  • GHS 47.00

  • Safe

  • 50kg

  • GHS 47.00

  • Supacem

  • 50kg

  • GHS 47.00

  • Currency

  • Buying

  • Selling

  • GHS - EUR

  • 7.7430

  • 8.2360

  • GHS - GBP

  • 9.1678

  • 9.7446

  • GHS - NGN

  • 70.4182

  • 70.4370

  • GHS - USD

  • 7.0500

  • 7.4500

  • GHS - ZAR

  • 0.4608

  • 0.5068

  • Current

  • Year Ago

  • GDP Growth Rate

  • 4.64%

  • 0.88%

  • Ghana Reference Rate

  • 14.50%

  • 15.50%

  • Inflation

  • 8.97%

  • 9.87%

  • Policy Rate

  • 13.50%

  • 14.50%

  • T-Bill (182 days)

  • 12.4316%

  • 13.2555%

  • T-Bill (364 days)

  • 13.8773%

  • 16.1134%

  • T-Bill (91 days)

  • 12.6100%

  • 12.4701%

Videos

Opinion

Partners

Feedback Form

We would like to hear from you.
Top