• About
  • Advertise
  • Privacy Policy
  • Contact
Tuesday, July 15, 2025
  • Login
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships
No Result
View All Result
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships
No Result
View All Result
The Vaultz News
No Result
View All Result

Fitch Corrects Ghana’s Credit Rating Action on Senior Unsecured Debt

January 22, 2022
Stephen M.Cby Stephen M.C
in Economy, One Top Story
0
Fitch Corrects Ghana’s Credit Rating Action on Senior Unsecured Debt

International rating agency, Fitch, has made slight corrections to the rating action of Ghana’ senior unsecured debt that it published on January 14, 2022.

The recent document however, maintained all the issues raised in the previous rating which downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘B’ and the agency added that the rating is “not affirmed”.

“This is a correction of the rating action commentary published on 14 January 2022. It corrects the rating action on Ghana’s senior unsecured debt, which Fitch has downgraded, not affirmed. Fitch Ratings has downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘B’. The Outlook is Negative”.

Fitch

Key Rating Drivers

RelatedPosts

“Stop Listening to the Alhaji on the Corner!” – BoG Boss Slams Cedi Speculation Culture

BoG Blows $1.4 Billion in Forex in Just Three Months—IMF Raises Red Flags

Interest Rate Hike: A Short-Term Threat to Ghana’s Stock Market Performance – Analyst Warns

The downgrade of Ghana’s IDRs and Negative Outlook reflect the sovereign’s loss of access to international capital markets in 2H21, following a pandemic-related surge in government debt. This comes in the context of uncertainty about the government’s ability to stabilize debt and against a backdrop of tightening global financing conditions.

“In our view, Ghana’s ability to deliver on planned fiscal consolidation efforts could be hindered by the heavier reliance on domestic debt issuance with higher interest costs, in the context of an already exceptionally high interest expenditure to revenue ratio”.

Fitch

Ghana’s effective loss of market access to international bond markets increases risks to its ability to meet medium-term financing needs. Fitch believes Ghana has sufficient liquidity and other available external financing options to cover near-term debt servicing without Eurobond issuance.

However, there is a risk that non-resident investors in the local bond market could sell their holdings, particularly if confidence in the government’s fiscal consolidation strategy further weakens, placing downward pressure on its reserves, it iterated.

Fitch assumes that Ghana will be unable to issue on international capital markets in 2022 and prospects for doing so in 2023 are uncertain. Ghana’s international reserve position has become highly reliant on annual Eurobond issuance. Moreover, as of July 2021, non-resident investors held just below 20% (USD5.8 billion) of Ghana’s outstanding domestic government debt. While the maturity of these holdings is long-term, an outflow would put additional downward pressure on Ghana’s reserves.

“We forecast that Ghana will face approximately USD2.7 billion (3.3% of GDP) in sovereign external interest service and amortization payments in 2022. We believe that the government can meet its external debt servicing without market access given its reserves, which we estimate at USD7.9 billion at end-2021 (3.2 months of current external payments)”.

Fitch

Reserves were bolstered by USD3 billion in Eurobonds in 2Q21, which helped the government to meet its approximately USD3.5 billion (4.7% of GDP) in sovereign external debt servicing costs last year, and by the USD1 billion IMF SDR allocations.

Deficit to narrow

Fitch forecasts the general government fiscal cash deficit to narrow to 9.1% of GDP in 2022 from 15.1% in 2020 and 12.5% in 2021 (including 3% of GDP in domestic arrears clearance and payments related to the state-owned energy sector). The 2022 deficit would still be more than twice the 2022 ‘B’ median of 4.6% and risk to public finances remain high. The government envisages a deficit (including financial and energy sector support) of 7.4% in 2022 and 5.5% in 2023, with a fall to below the legal deficit ceiling of 5% in 2024.

“The government’s fiscal consolidation plans are focused on revenue measures adopted in the 2022 budget, including a new 1.75% e-levy on certain digital transactions and changes to the calculation of certain taxes and import duties. The medium-term fiscal framework envisages that these new revenue measures, together with fading pandemic-related expenditure, will drive an increase in government revenue to 20.0% of GDP in 2022 from an estimated 15.4% in 2021”.

Fitch

Fitch believes that Ghana will achieve moderate medium-term fiscal consolidation, but that the government’s forecasts are overly optimistic.

“We forecast the fiscal deficit will narrow by significantly less, to 9.5% of GDP in 2022 and approximately 8.0% in 2023, as government revenue experiences a smaller increase. Ghana has struggled with earlier efforts to raise revenue/GDP and public finances were deteriorating even before the pandemic, albeit partly related to the clean-up in the financial and energy sector”.

Fitch

On public debt, Fitch maintained that general government debt reached an estimated 83% of GDP at end-2021, including approximately 2% of GDP in debt held through the Energy Sector Levy Act special purpose vehicle.

“We forecast government debt to remain on an upward path through 2025, but expect debt to grow at a slower pace as the primary deficit narrows in 2022 and 2023. Debt affordability metrics will remain weak. Ghana’s debt constitutes 539% of government revenue, compared with the ‘B’ median of 325%. Interest payments were 44.6% of revenue in 2020 and the ratio is likely to continue rising through 2023, assuming a rising share of domestic debt in total debt in the absence of external financing options”.

Fitch

Given the slow pace of private sector credit growth and the weak asset quality environment, Fitch expects that the domestic lenders will be able to meet the government’s increased reliance on domestic debt issuance.

READ ALSO: Ministry of Education Reverses Academic Calendar To Trimester System

Tags: Debte-levyEurobondsFitchrevenue
Please login to join discussion
Previous Post

Ministry of Education Reverses Academic Calendar To Trimester System

Next Post

Bellwether Stocks Trade Flat For Second Consecutive Day But With Improved Market Activity

Sign up for The Vaultz analytic wire

Get weekly news analysis from top editors at The Vaultz and stay informed on trending economic and business issues from across the globe.

Related Posts

President John Dramani Mahama
General News

Mahama Commits to Developing the Western North Region

July 15, 2025
Hon. Sammy Awuku, Fuel, Appointees
General News

Minority Labels Mahama’s Fuel Cut Directive a PR Gimmick

July 15, 2025
Burna Boy Worried Over Small Crowd at Wireless Festival
Entertainment

Burna Boy Retracts Afrobeats Comments

July 15, 2025
EU Launches Preparedness Union Strategy
Europe

Individuals, Entities Sanctioned For Destabilising Moldova’s Democracy

July 15, 2025
UK Ends Secret Afghan Relocation Scheme
UK

UK Ends Secret Afghan Relocation Scheme

July 15, 2025
COPEC Lauds Mahama for Ending Appointee Fuel Perks—Calls It ‘Forward-Thinking!’
Extractives/Energy

COPEC Lauds Mahama for Ending Appointee Fuel Perks—Calls It ‘Forward-Thinking!’

July 15, 2025
President John Dramani Mahama
General News

Mahama Commits to Developing the Western North Region

by Evans Junior OwuJuly 15, 2025
Hon. Sammy Awuku, Fuel, Appointees
General News

Minority Labels Mahama’s Fuel Cut Directive a PR Gimmick

by Silas Kafui AssemJuly 15, 2025
Burna Boy Worried Over Small Crowd at Wireless Festival
Entertainment

Burna Boy Retracts Afrobeats Comments

by Esther Korantemaa OffeiJuly 15, 2025
EU Launches Preparedness Union Strategy
Europe

Individuals, Entities Sanctioned For Destabilising Moldova’s Democracy

by Comfort AmpomaaJuly 15, 2025
UK Ends Secret Afghan Relocation Scheme
UK

UK Ends Secret Afghan Relocation Scheme

by Lawrence AnkutseJuly 15, 2025
COPEC Lauds Mahama for Ending Appointee Fuel Perks—Calls It ‘Forward-Thinking!’
Extractives/Energy

COPEC Lauds Mahama for Ending Appointee Fuel Perks—Calls It ‘Forward-Thinking!’

by Stephen M.CJuly 15, 2025
President John Dramani Mahama
Hon. Sammy Awuku, Fuel, Appointees
Burna Boy Worried Over Small Crowd at Wireless Festival
EU Launches Preparedness Union Strategy
UK Ends Secret Afghan Relocation Scheme
COPEC Lauds Mahama for Ending Appointee Fuel Perks—Calls It ‘Forward-Thinking!’
[/vc_row_inner]

Recent News

  • Mahama Commits to Developing the Western North Region
  • Minority Labels Mahama’s Fuel Cut Directive a PR Gimmick
  • Burna Boy Retracts Afrobeats Comments
  • Individuals, Entities Sanctioned For Destabilising Moldova’s Democracy
  • UK Ends Secret Afghan Relocation Scheme
The Vaultz News

Copyright © 2021 The Vaultz News. All rights reserved.

Navigate Site

  • About
  • Advertise
  • Privacy Policy
  • Contact

Follow Us

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2D
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships

Copyright © 2021 The Vaultz News. All rights reserved.