Rating agency, Fitch, expects Ghana’s public sector debt to reach 99% of Gross Domestic Debt at the end of 2023, from 88% in 2022.

This it says will be driven by a depreciation of the cedi against the US dollar. So far, the local currency has lost about 11.80% in value to the dollar on the retail market and 22% on the interbank market.

It said minus a Common Framework restructuring, public sector debt would decline to 95% of GDP in 2024 and 94% in 2025. This is amid continued fiscal consolidation and a stabilization of the cedi.

The International Monetary Fund (IMF) had projected a decline in Ghana’s debt-to-GDP ratio for 2023 to 84.9% from 92.4% in 2022.

According to its October 2023 Fiscal Monitor, the country’s total debt-to-GDP ratio is expected to fall consistently in the next five years.

Ghana’s public finances deteriorated last year which contributed to a prolonged lack of access to Eurobond markets and in turn led to a significant decline in external liquidity.

This triggered Ghana’s downgrade to ‘CCC’ last year by Fitch, which was followed by further downgrades that culminated in the country’s placement on restricted default (‘RD’) in early 2023. Fitch affirmed both the LTFC and the LTLC IDRs at 'RD’ on July 28, 2023.

Despite this, Fitch said foreign-currency debt is less than 40% of Ghana’s total public debt, well below the ‘B’ median.

Again, Ghana has stronger levels of governance than the ‘B’ median, and a record of democratic elections, with peaceful transitions of power since 1992.

But it expressed concerns about the country’s weaknesses such as low international liquidity position, low per-capita income and human development indicators and the concentration of Ghana’s exports in oil, gold and cocoa, exposing it to volatility in commodity prices.