International rating agency, Fitch, has projected a drop in the country’s public debt to 87% of the Gross Domestic Product (GDP) by the end of 2023.

This is from the 89% that was recorded in 2022.

Fitch said the reduction is driven by the 50% haircut on the Bank of Ghana’s holdings of non-marketable debt, which represents a debt reduction of 4.2% at the end of the year.

The rating agency said it expects this will be partly offset by 33% year-on-year cedi depreciation compared with end-2022 and the primary deficit.

This came as part of the announcement of the upgrade of Ghana’s Long-Term Local-Currency Issuer Default Rating (IDR) to “CCC” from “RD”.

“Assuming a 30% haircut on external debt considered for the restructuring, year-on-year cedi depreciation of 20% in 2024 and 9% in 2025, and a GDP deflator of 21% and 10% respectively, public debt would fall to 78% by 2025, although there is a high degree of uncertainty surrounding the definitive external debt restructuring parameters,” parts of the statement said.

Fitch affirmed Ghana’s Long-Term Foreign-Currency IDR at ‘RD’ and the Country Ceiling at ‘B-‘. Fitch has assigned ‘CCC’ ratings to two interest-only bonds issued on completion of pension funds holdings of the domestic debt exchange.

SSD/NOQ

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