Fitch Solutions has suggested that Ghana is likely to experience positive developments in negotiations with its bilateral debt creditors before the end of the year.
The UK-based firm believes that the worst is behind the country as it has made progress with fiscal consolidation and other macroeconomic indicators.
Additionally, Fitch Solutions anticipates that Ghana will reach an agreement with its external bondholders by the middle of next year. The firm notes that Ghana, not being a large creditor like Zambia, is expected to face fewer difficulties in reaching a deal with its 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 clarified that investor sentiment in Ghana is anticipated to improve following the positive developments with its bilateral creditors in the context of 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 added, however, that Ghana’s negotiations with external bondholders will likely take longer, as they hold approximately 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.