Adnan Adams Mohammed
Ghana is likely to escape from defaulting on its foreign-currency debt this year, according to Fitch Ratings.
Fitch also anticipate same for Zambia due to gradual fiscal consolidation in these nations, attributing it to financing constraints and ongoing fiscal reform efforts, often linked to International Monetary Fund (IMF) programs.
This consolidation is projected to contribute to the stabilisation of government debt/GDP ratios. But, Fitch underscores the reliance on IMF programmes, noting that, the debt restructuring processes under the Common Framework for both Ghana and Zambia are susceptible to potential delays.
“Challenges may persist in securing affordable access to international capital markets without credit enhancements for most Sub-Saharan African sovereigns”, Fitch indicated in its 2024 Regional Sub-Saharan African Sovereigns Outlook.
Multilateral funding is identified as a crucial support for the region, with Fitch acknowledging that risks continue to lean towards the downside.
Looking at the broader macroeconomic landscape in Sub-Saharan Africa for 2024, Fitch envisions stable median real GDP growth and a decrease in average inflation, albeit noting that inflation remains elevated in several sovereigns.
The agency emphasised the persistent financing challenges faced by the region, reinforcing the significance of multilateral funding while acknowledging the existence of potential risks in the economic outlook.
“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.