Ghana and Zambia are to emerge from default on their foreign-currency debt this year, according to the rating agency Fitch.
In its Regional Sub-Saharan African Sovereigns Outlook for 2024, Fitch stated that both countries are anticipated to successfully restructure their debts during the year.
“We forecast gradual fiscal consolidation due to financing constraints and fiscal reform efforts, which, in many cases, are linked to IMF [International Monetary Fund] programmes. This consolidation will help government debt/GDP to broadly stabilise”.
“We expect Ghana and Zambia to emerge from default on their foreign-currency debt in 2024, although, in both cases, the debt restructuring process under the Common Framework is vulnerable to further delays”, it added.
The UK-based firm continued to highlight that the macroeconomic outlook for sub-Saharan Africa in 2024, including Ghana, suggests stable median real Gross Domestic Product (GDP) growth and lower average inflation. However, it noted that inflation remains high across several sovereigns in the region.
“The macro outlook for sub-Saharan Africa (SSA) in 2024 points to stable median real GDP growth and lower average inflation, which nonetheless remains high across a number of sovereigns”.
Ghana’s inflation rate stood at 23.2% at the end of 2023. Despite the positive outlook on economic indicators, Fitch anticipates that financing challenges will persist for many Sub-Saharan African sovereigns.
The report notes that most of these countries lack affordable access to international capital markets without credit enhancements. Fitch emphasized that multilateral funding will continue to be a crucial support mechanism across the region. However, the report also highlighted that risks remain tilted to the downside.