Fitch Ratings has indicated that strong nominal Gross Domestic Product (GDP) growth, fiscal consolidation, ongoing debt restructuring, and significantly larger-than-anticipated exchange rate appreciation in recent months will contribute to public debt falling to 60% of GDP in 2025 and 2026.

This will be from 72% in 2024 and a peak of 93% in 2022 when Ghana announced its intention to default.

However, the UK-based firm said this is compared with its 2026 'B' median forecast of 51%.

This is coming after it upgraded Ghana's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'B-' from 'Restricted Default' (RD). It also changed the Outlook to Stable.

It further said “We expect the interest/revenue ratio to remain broadly stable, at 26% in 2025 and 2026, from 25% in 2024 and a peak of 48% in 2021. This will be driven by a declining stock of debt, offset by resumption of interest payments on external commercial debt and a step-up in coupon payments on the DDEP, with the weighted average coupon on the DDEP [Domestic Debt Exchange Programme] bonds increasing to 9.1% in 2025 from 5.4% in 2024.”.

It added that the interest/revenue ratio is above the 'B' and the 'C'/D' medians of 13% and 16%, respectively, and is a key constraint on the rating.

Current Account Surpluses, Reserve Accumulation

It forecast the current account surplus to narrow from a record high of 4.3% of GDP in 2024 to 1.1% in 2026, on its assumption of increased imports driven by economic growth, and a projected decline in key export prices.

This is a shift from pre-default large deficits and compares favourably with the 'B' median deficit of 3% of GDP in 2026.

Fitch said this will enable Ghana to accumulate reserves of 3.9 months of current external payments in 2026, from 2.6 months in 2024 and 1.6 months in 2022 and against a 'B' median of 4.9 months in 2024.

The evolution of gold prices significantly contributed to the CAS in 2024 and will be an important determinant of current account performance.