Fitch Solutions has hinted that Ghana is likely to make progress with its bilateral debt creditors quickly with a positive development before the end of the year.
According to the UK-based firm, the worst situation is now behind the country as it has made progress with fiscal consolidation and other macroeconomic indicators.
In its latest Sub-Saharan Africa Macroeconomic Update, it said the country will also reach an agreement with its external bondholders by the middle of next year.
Senior Analyst for Sub-Saharan Africa at Fitch Solutions, Mike Kruiniger, said Ghana is not a big creditor like Zambia, hence will not find much difficulties in reaching a deal with it creditors. .
“Our view as Ghana will make progress regarding the restructuring….very quickly with some positive development expected before the end of 2023. Bilateral debt as a share of total external debt in Ghana is very low and Ghana is not a bigger creditor like Zambia”.
“So the dynamics should speed up negotiations process with the official creditors”, he added.
Mr. Kruiniger explained that investor sentiment in Ghana is expected to go up following the positive progress with its bilateral creditors regarding the debt restructuring.
“Positive signaling regarding a debt restructuring due between Ghana and its bilateral creditors should then improve investors’ sentiment, increase demand for the cedi and allow the exchange rate to plow back some of its losses”.
He, however, added that Ghana’s negotiation with the external bondholders will take much longer because they hold about 60% of the country’s total external debt.
“I think it is the negotiations of Ghana’s bondholders that are going to take longer given that the commercial debt constitutes more than 60% of total external debt and most of this is in the form of Eurobonds.
“So our view is that Ghana will be able to reach a deal with the external bondholders most likely by mid-2024”, Mr. Kruiniger alluded.
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