International rating agency, Fitch, has stated that despite the debt restructuring programme embarked on by Ghana, its debt to GDP ratio is just one percent shy of 100%.

It is estimated that the present value of Ghana’s public debt-to-Gross Domestic Product (GDP) has been reduced by only one percentage point to slightly above 100% of the GDP.

Fitch arrived at this estimation by using the standard 5% discount rates that apply in the International Monetary Fund/World Bank debt sustainability framework for low-income countries.

According to the agency, Ghana’s domestic debt exchange only increased the debt-to-GDP ratio by 0.6 percentage points with payment-in-kind coupons corresponding to an increase in the face value of the new bonds compared with the face value of tendered bonds.

Fitch posited that Ghana’s access to an IMF bailout may be dependent on its ability to show a path towards bringing the present value of debt to 55% of GDP over the forecast horizon based on the IMF/World Bank debt sustainability analysis.

Also, Ghana’s ability to get official bilateral creditors to provide financing assurances in the context of the Common Framework external debt restructuring that authorities have requested.

It also cast doubts on Ghana’s chances of getting through in time with creditors since the official creditor committee, responsible for providing the financing assurances, has not been created yet.

Fitch however is pessimistic about the possibility of getting an IMF Board approval of the Extended Credit Facility (ECF) arrangement and for a new debt sustainability analysis to be published, before the end of the second quarter of 2023.

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