Despite the Domestic Debt Exchange Programme completed on February 24, 2023, which reduces interest payments in 2023 by an estimated ¢12.1 billion, or about 9% of expected 2023 revenue, interest payments would still represent 45% of revenue and grants on a commitment basis.

According to Fitch Ratings, a further reduction of interest payments is expected from the current restructuring of domestic Foreign Currency bonds, but this reduction is not expected to be significant.

Since May 2022, the government has issued only short-term bills.

Although yields have significantly declined following completion of the DDEP, Fitch estimates the issuance of short-term treasury bills will continue in 2023, posing refinancing risks.

Public sector debt to reach 99% of GDP

Fitch also expects public sector debt to reach 99% of Gross Domestic Product at end-2023, from 88% at end-2022, driven by a depreciation of the cedi against the US dollar.

Without a Common Framework restructuring, public sector debt would decline to 95% of GDP in 2024 and 94% in 2025, amid continued fiscal consolidation and a stabilisation of the cedi, it added.

As part of the IMF programme, Ghana is expected to undertake a primary fiscal adjustment of 5.1% of GDP by 2026 compared with 2022.

Fitch estimates the primary deficit will reach 1.3% on a commitment basis in 2023, from 3.6% in 2022, before narrowing to 0.1% in 2024 and turning to a 0.9% primary surplus in 2025, amid revenue increases of about 2.0% between 2022 and 2025, capital expenditure rationalisation of 1.0%, and other expenditure savings of 1.0%.