Fitch Solutions believes that Ghana will reach a debt deal with its external creditors in the second half of 2024.

According to the UK-based firm, this should provide tailwinds to the exchange rate and further limit imported price pressures.

“Indeed, we believe that Ghana will reach a debt deal with its external creditors in H224 [half-year 2024], which should provide tailwinds to the exchange rate and further limit imported price pressures”.

It added that real Gross Domestic Product growth will remain well below trend on the back of fiscal consolidation efforts under the IMF programme.

However, the Central Bank will likely seek to lower interest rates to stimulate economic activity.

BoG to cut policy rate to 22% by end of 2024

Fitch Solutions is also predicting that the Bank of Ghana would cut the policy rate by 600 basis points to 22% by the end of next year.

The UK-based firm is attributing this to the downward trend in inflation from the fourth quarter of this year.  

“In 2024, we expect that the BoG will continue easing monetary policy, cutting the benchmark interest rate by 600bps to 22.00% by year-end.”

Inflation, it said will average 17.1% in 2024 due to high base effects mostly in the first half of 2024 and exchange rate stability.

This it believes will put interest rates in a positive territory.

Risks to outlook

On the risks to the outlook, Fitch Solutions, said risks to its forecast are skewed towards higher interest rates.

“If external debt restructuring negotiations stagnate, investor sentiment towards Ghanaian assets will weaken, which would likely trigger another round of currency depreciation”, it explained

In this scenario, it added that, inflation would remain higher for longer, prompting the central bank to adopt a more hawkish stance than our current baseline scenario assumes.