Despite a substantial redemption reprofiling and significantly lowered interest rates, rating agency, Fitch estimates that the present value of  Ghana’s public debt-to-Gross Domestic Product (GDP) has been reduced by only one percentage point to slightly above 100% of GDP.

This is by using the standard 5% discount rates that applies in the International Monetary Fund/World Bank debt sustainability framework for low-income countries.

It added the domestic debt exchange has increased the debt-to-GDP ratio by 0.6 percentage points with payment-in-kind coupons corresponding to an increase in the face value of the new bonds compared with the face value of tendered bonds.

Furthermore, the rating agency said the IMF support for Ghana will likely depend on the government's ability to show a path towards bringing the present value of debt to 55% of GDP over the forecast horizon on the basis of the IMF/World Bank debt sustainability analysis and the ability of official bilateral creditors to provide financing assurances in the context of the Common Framework external debt restructuring that authorities have requested.

Although discussion has started among some official creditors, Fitch stressed that the official creditor committee, responsible for providing the financing assurances, has not been created yet.

It therefore does not expect the provision of financing assurances, which will pave the way for an IMF Board approval of the Extended Credit Facility (ECF) arrangement and for a new debt sustainability analysis to be published, before end of the second quarter of 2023.