Economist Intelligence Unit (EIU) is predicting that Ghana will reach an agreement with its external creditors in the coming weeks to pave the way for the restructuring of its foreign loans.

This is a disclosure from its newest document titled “Outlook for Global Sovereign Credit Risk”.

The forecast will come as a piece of good news for the country as it will be on schedule to begin its external debt restructuring.

According to the UK-based firm, Ghana has advanced with its negotiation for external debt restructuring.

The country in December 2022 requested a bilateral debt restructuring under the Common Framework for Debt Treatments supported by the G20. In June this year, the government sent a non-binding working debt-restructuring proposal to official bilateral creditors, signifying the beginning of a negotiation process that the EIU said it expect to conclude in the coming weeks.

“Following a default in December 2022, Ghana has requested bilateral debt restructuring under the Common Framework for Debt Treatments supported by the G20. In June the Ghanaian authorities sent a non-binding working debt-restructuring proposal to official bilateral creditors, signifying the beginning of a negotiation process that we expect to conclude in the coming weeks.”

Ghana, 5 others defaulted on their loans in 2022

Ghana and five other countries (Ghana, Mali, Sril Lanka, Russia, Ukraine and Belarus) defaulted on their loans in 2022 as public finances became strained, whilst interest rates surged.

“Six countries defaulted in 2022: three of these (Russia, Ukraine and Belarus) were the result of Russia’s invasion of Ukraine, while the other three (Ghana, Sri Lanka and Mali) related either to a combination of domestic economic imbalances—exacerbated by a less favourable external context—or policy mismanagement”.

Africa under pressure

The UK-based firm added that many more countries are expected to record debt default this year.Most of these countries at the highest risk of a debt default are in Africa.

“Most of the countries at the highest risk of a debt default are in Africa, reflecting high indebtedness, heavy external debt-service burdens and stretched public finances:.

It stressed that African economies had taken advantage of low-cost international credit prior to the pandemic for budgetary and balance of payments support, accumulating large external debt burdens as a result.

However, the rising interest rates have increased debt-servicing costs dramatically.