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.
Ghana’s economy is likely to end 2023 with a public debt to GDP ratio of 99 percent, Fitch Solutions has said. The projected public debt figure is an increase from the previous 88% recorded in 2022.
The primary driver for this projected rise is the depreciation of the cedi against the US dollar, with the local currency having already lost about 11.80% in value to the dollar on the retail market and 22% on the interbank market.
Ghana faces stive debt accumulation matrix. But Fitch is projecting that the public debt could decline by 4 percent of GDP at the end of 2024 to 95% of GDP and further to 94% in 2025 at the back of continues fiscal consolidation and stabilisation of the cedi.
Meanwhile, the International Monetary Fund (IMF) had previously projected a decline in Ghana’s debt-to-GDP ratio for 2023 to 84.9% from 92.4% in 2022.
The October 2023 Fiscal Monitor indicated an expected consistent decline in the country’s total debt-to-GDP ratio over the next five years.
Ghana has faced challenges in its public finances last year, leading to restricted access to Eurobond markets and a significant decline in external liquidity.
This resulted in credit downgrades, including a downgrade to ‘CCC’ by Fitch and subsequent placement on restricted default (‘RD’) in early 2023.
Despite the downgrades, Fitch notes that foreign-currency debt constitutes less than 40% of Ghana’s total public debt, well below the ‘B’ median.
The agency acknowledges Ghana’s stronger levels of governance compared to the ‘B’ median and its democratic record with peaceful transitions of power since 1992.
However, Fitch expresses concerns about the country’s weaknesses, including a low international liquidity position, low per-capita income and human development indicators, and a heavy reliance on exports of oil, gold, and cocoa, exposing it to commodity price volatility.
Government of Ghana’s financing of healthcare from consolidated revenues contributed 67.5 percent to the Ministry of Health budget in 2022, according to the ministry’s data.
The funds for the health system come from non-tax revenues, taxes, donor contributions, and out-of-pocket payments by individuals and households.
Consequently, external assistance for health as a share of total health spending between 2015 and 2019 has decreased from 25% to 11%.
Meanwhile, an international investment firm and rating agency, Fitch Solutions, has projected an increased in government of Ghana spending by about $1.3 billion in 2024.
According to the UK firm, Ghana’s health budget is expected to expand to ¢16.5 billion in 2024, from ¢15.2 billion in 2023. However, the country’s poor fiscal space outlook in addition to factors such as fiscal capacity deficits, debt and relatively low prioritization of health does not create a bright picture for sustained financing for primary health care. All these notwithstanding, the Universal Health Coverage (UHC) roadmap aims at mobilizing the equivalent of at least US$7 billion over 10 years in non-wage-resources including GDP allocation for healthcare delivery, especially primary health care.
Healthcare system
This requires significant policy measures to facilitate a transition process from previously supported donor interventions to sustainable domestic public financing of interventions.
Fitch further indicates that, from its projected figures, the cost elements to benefit more will be the medical device market due to increasing government spending on health and economic recovery over 2024.
“We believe ongoing health infrastructure projects and rollout of the National Health Insurance Scheme will continue to support increased budgetary spending on health over the coming decades as well spending on pharmaceuticals and medical devices”, Fitch Solutions said in its new release.
“We further highlight recovery in Ghana’s real Gross Domestic Product in 2024 after sharp declines in 2022 and 2023 will also support private spending on medical devices and medical devices imports in the country over our forecast period.”
GDP forecast
“We forecast real GDP growth to accelerate to 3.7% in 2024 from an estimated 3.0% in 2023. However, GDP will remain below the five-year pre-pandemic average of 5.3% as a result of strong price pressures and fiscal consolidation”, the UK based firm added.
Medical devices market to record double digit growth
In terms of the medical devices market, it said all product categories will post high to double digit growth in US dollar terms, led by consumables and dental products.
Consumables accounted for more than a quarter of the total medical devices market in Ghana, and the category is expected to record the fastest Compound Annual Growth Rate (CAGR) growth of 21.3% in US dollar terms over our five-year forecast period to 2027.
“We believe growth in consumables over the near-to-medium-term will continue to be supported by improving access to healthcare in Ghana as the country continues to implement its universal health coverage goals”, it pointed out.
“While accounting for the smallest portion of the medical devices market, dental products will record a 2022-2027 CAGR of 21.1% in US dollar terms. Dental services such as tooth replacement and filling, root canal therapy, dental X-ray and scaling are provided free of charge in the public health sector in Ghana, however access remains limited in rural areas due to a shortage of equipment and trained dentists”, it furthered.
Fitch Solutions said demand for diagnostic products is also expected to remain strong as the market copes with prevention and treatment with the double burden of chronic and communicable diseases.
Strategic Purchasing for Primary Health
Care in Ghana
At the recent held Ghana’s Health Sector Annual Summit 2023 in Accra, in June this year, it was confirmed that, the National Health Insurance Scheme (NHIS) is the main source of financing primary health care services in Ghana. The Scheme purchases health services for its members from over 4000 accredited healthcare providers.
In 2020, the Scheme spent GH₵ 2.39 billion (approximately USD 408 million) on healthcare providers’ claims. Outpatient care accounted for the largest share of NHIA spending, with GH₵ 1.37 billion (approximately USD 235 million), representing 57.3%. The NHIA has set provider payment rates for healthcare services, which are negotiated annually with healthcare providers.
Available evidence suggests that since the implementation of the NHIS in 2003, the NHIA has employed different payment models, including fee-for-service (FFS) and diagnosis-related grouping (DRG), and piloted the capitation method. However, the scheme continues to face some challenges, including the following:
Exclusion of some preventive, health promotion, and specialized services: The NHIS does not cover all health services, and this leads to
patients paying out-of-pocket for the excluded services.
Sustainable Financing for Primary Health Care towards Attainment of Universal Health Coverage In Ghana:
Over the last three decades, the health sector has implemented interventions to improve services at the Primary Health Care (PHC) level, for example, the Community-based Health and Planning Services (CHPS) concept.
Recent interventions to reorganize PHC services for further improvement in health outcomes include:1) development of the Essential Health Services Package; 2) revision of the incentive package for health professionals in rural areas; 3) introduction of the Network of Practice; 4) implementation of framework contract for tracer medicines; and 4) scaling up of the last
mile distribution of essential medicines and other commodities.
However, efficient allocation of resources to finance these interventions to realize
the desired outcomes is a challenge confronting the stakeholders.
There has not been a dedicated source of funding for PHC services over the years. Funding for PHC services is uncoordinated, leading to wastage,
low service coverages, and poor health outcomes. Although the NHIS pools funds for purchasing PHC for the population, some PHC services are
not covered by the scheme, for example, health promotion and other preventive services. In addition, the effective use of these resources has
been a concern by many health sector actors. Lately, there has been a call by stakeholders to increase resource allocation to finance services at the PHC levels towards the realization of UHC.
A finance expert has shot-down arguments by government actors that the second quarter Gross Domestic Product (GDP) of 3.2 percent as recorded shows that the economy of Ghana is recovered from its deteriorated stage.
The expert alluded that, conscientious examination of the macro-economic indicators and targets show that the country has not recovered.
Reacting to some commentaries by government actors and economists, after the Ghana Statistical Service released the second quarter economic figures, who are of the view that, although the 3.2% is slower as compared to the first quarter growth of 3.3% as revised from 4.2 yet it is a sign that the economy is recovering.
“What we are seeing now is that government’s spending is driving this expansion, for the second quarter of this year and not real economic activities undertaking by businesses,” Professor Lord Mensah, Lecturer at University of Ghana Business School said in an interview last week.
“A lot more needs to be done. Government’s spending is driving this expansion, and not real economic activities undertaking by business”, he stressed.
Prof. Mensah pointed out that real growth would have positively impacted on government’s revenue.
Figures released by the Ghana Statistical Service highlighted a decline in the growth of the Ghanaian economy, particularly in the industrial sector, which continues to face challenges. During the second quarter of 2023, the economy expanded at a rate of 3.2%, a figure notably smaller than the previous year’s performance (3.5%).
Several key subsectors, including construction, electricity, and manufacturing, all experienced contractions during this period, contributing to the overall economic slowdown. Statistical Service also revised the growth rate for the first quarter of 2023, adjusting it from the earlier reported 4.2% down to 3.3%.
In the second quarter of 2023, the economy displayed a mix of expansion and contraction across various sectors. Notably, the Information & Communication sector experienced remarkable growth, expanding by 26.4%. Fishing also saw a substantial expansion of 12.2% and Social Work expanded by 11.0%.
However, six sub-sectors faced contraction during this period, with construction showing the most significant decline at -11.7%, suggesting potential challenges in the construction industry. Trade, along with repair of motor vehicles and motorcycles, contracted by -5.3%.
Electricity, forestry, water supply, sewerage, waste management and remediation activities, and manufacturing also experienced varying degrees of contraction.
Ghana’s government has already revised its economic projections for the year, reducing the growth forecast by approximately 50%. Additionally, the country is now expecting higher inflation and a primary deficit, a significant shift from the previous hope for a surplus.
During the mid-year budget review in parliament, Finance Minister Ken Ofori-Atta disclosed that last year’s budget deficit was 11.8 per cent of GDP, nearly double the initial target of 6.3 per cent. For 2023, the government anticipates the economy to grow by 1.5 per cent, down from the earlier projection of 2.8 per cent.
These adjustments are attributed to fiscal consolidation measures and challenging global economic conditions.
This downward revision in projected growth for 2023 is attributed to a general slowdown in all three sectors of the economy, influenced by factors such as the fiscal consolidation plan under the three-year IMF-supported programme and challenging global conditions.
Nevertheless, the Finance Minister remains hopeful, projecting that the overall GDP growth will rebound to 2.8%, 4.7% and 4.9% in 2024, 2025 and 2026, respectively.
Fitch Solutions has prompted to assign positive ratings to parameters of Ghana’s economy if the debt-riddened West African nation is able to restructure it’s pension funds .
Ghana’s LTLC IDR rating will be contingent on a forward-looking evaluation of the country’s commitment and ability to meet its local-currency debt obligations, the international rating agency said.
“Once Fitch judges Ghana has normalised relations with a significant majority of non-tendered securities bondholders and completes the restructuring of local-currency bonds held by pension funds, the agency will assign Ghana’s LTLC IDR based on a forward-looking assessment of its willingness and capacity to honour its local-currency debt”, Fitch said.
It added that “once Ghana reaches an agreement with private creditors on the restructuring of its foreign-currency-denominated debt and completes that restructuring process following the Common Framework official creditors’ claims treatment, Fitch will assign a LTFC IDR based on a forward-looking assessment of its willingness and capacity to honour its foreign-currency debt”.
This, too, will be determined based on an assessment of Ghana’s willingness and capability to fulfill its foreign-currency debt commitments.
The agency cautioned that a downgrade for Ghana could transpire if there is an elevated risk of the country failing to make its first coupon payments on the bonds scheduled for August 2023.
Fitch employs its proprietary Sovereign Rating Model (SRM), which rates Ghana akin to ‘CCC+’ on the Long-Term Foreign-Currency IDR scale.
It is important to note that the current ratings are not accompanied by the SRM and Qualitative Overlay (QO) explanations, as Fitch’s sovereign rating committee has chosen to adhere to the rating definitions for scores ‘CCC+’ and below.
The SRM model developed by Fitch employs a comprehensive approach, factoring in 18 variables over a three-year period, including one year of projections.
This methodology generates a score that corresponds to the LT FC IDR rating.
In the midst of growing uncertainty, Fitch Solutions has described investors’ sentiment towards the Ghanaian market as weak.
The international rating agency noted that foreign Investors remain cautious about uncertainty around Ghana’s debt restructuring processes.
In its latest assessment of Ghana dubbed “Bleak Investment Outlook Dims Ghana’s Short-Term Growth Prospects”, It alluded that the current unfavorable trend towards Ghana’s instrument to the rapid depreciation of the local currency (cedi) since last year, coupled with ongoing uncertainty around Ghana’s external debt restructuring process under the G20 Common Framework, will keep foreign investors cautious.
“Indeed, yields on the country’s Eurobonds traded at an elevated 34.4% (as of July 6), indicating that sentiment towards the Ghanaian market remains weak”, according to the UK-based rating agency, Fitch Solutions.
“Moreover, we project that growth in Ghana’s most salient source markets – including the EU, UK and US – will soften over 2023”, it explained.
Fitch is not in tuned with Ghana’s restrictive monetary conditions, claiming that, such coupling with still-elevated inflation in the markets will dampen appetite for overseas expansions.
These dynamics, it said, inform the view that Foreign Direct Investment inflows into Ghana will fail to return to pre-pandemic levels in 2023, further clouding the short-term outlook for fixed investment.
Ghana’s economic collapse cannot solely be blamed on COVID-19 pandemic and the Russian/Ukraine war, Fitch Solutions has discounted government’s overused excuse.
It explains that, even before these external shocks hit the global economy, Ghana’s debt was above the sustainable level as measured against the International Monetary Fund’s threshold of debt to Gross Domestic Product ratio of 70 percent and below.
The international investors’ research firm argued that, Ghana went back to the international capital market in early 2021 in desperation for cash. This attracted investors to take advantage of the sweet rates Ghana was selling its Eurobonds, and led to investors oversubscribing Ghana’s bonds which later resulted in currency sell off, after which the country started witnessing symptoms of hiding chronic economic disease of escalating exchange rate and inflation since early 2022
“I think the answer is, it’s been aggravated by the Covid-19 pandemic and the war in Ukraine. Those two are not the only cost to Ghana’s woes”, Senior Country Risk Analyst, Mike Kruiniger, responding to a question at a recent Sub Saharan Africa Macroeconomic Update event said. “Both external and internal shocks caused the macroeconomic imbalances in the country.”
“Ghana’s debt servicing costs were already rising pretty rapidly prior to the pandemic with the government having to work on pretty large scale of spending projects including restructuring of the banking sector and providing free secondary education to everyone in Ghana”, he explained.
Mr. Kruiniger also blamed the high borrowing on the international capital market as one of the country’s problems.
“Ghana went back to the international capital market in early 2021, with this seamless desperation for cash. Investors started to flood the country which led the currency to sell off and after that, we’ve seen all the problems that Ghana has been facing since early 2022”.
He concluded that though the Covid-19 and the Russian Ukraine war have contributed to Ghana’s crisis, they are not only the reasons behind Ghana’s economic challenges.
Meanwhile, the Institute of Economic Affairs pointed that indiscipline in managing the country’s finances have caused the high fiscal deficits and consequently high inflation and currency instability, forcing innocent Ghanaians and businesses to pay for the mismanagement.
The think-tank expressed it worry in a paper published and titled “Institutionalising Fiscal Discipline and Macroeconomic Stability for Sustained Growth in Ghana: The Constitutional Pathway.”
Lead Researcher at the Intitute, Dr. John Kwakye, noted that Ghana has a long history of fiscal indiscipline and this is evident in its fiscal deficits being almost consistently higher than those of its peers in Africa.
“Our deficits tend to escalate in election years when we elevate election-related spending. Then we borrow to finance the deficits and cause our public debt to escalate to unsustainable levels. We have been in that situation numerous times. Our debt reached the first crisis situation around 2004, when it ballooned to over 100% of GDP”.
“We had to seek relief under the HIPC Initiative, which caused the debt-to-GDP ratio to drop to a sustainable level of 26% in 2006. Thereafter, we returned to our culture of fiscal indiscipline, which caused the debt to rise yet again. And today, the debt-to-GDP ratio is back to an unsustainable level of over 100%”, he explained.
He added that the country must do everything possible to safeguard or institutionalise fiscal discipline under the constitution, else it will always record macroeconomic instability.
Also, associated with the high fiscal deficits has been high inflation and currency instability, which the IEA called for immediate action.
According to Dr. Kwakye, Ghana has had much higher inflation rates than its peers, adding, the cedi has experienced much higher depreciation over the years.
Again, he said “government domestic borrowing to finance the deficits has elevated interest rates to levels that have crowded out the private sector, inhibiting investments and stifled economic growth. High fiscal deficits and the associated demand pressures have also spilled over to the external sector, leading to high current account deficits”.
The economist opined that, prevalent fiscal indiscipline and its associated macroeconomic instability, and over-borrowing to spend on goods and services are what have taken the country to the IMF about 17 times.
“We have been caught up in an unending cycle of high fiscal deficits, high interest rates, high inflation, high current account deficits, rapid exchange rate depreciation, and unstable growth. It is our prevalent fiscal indiscipline and associated macroeconomic instability and debt crises that have taken us to the IMF seventeen times”.
Ghana’s economic collapse cannot solely be blamed on COVID-19 pandemic and the Russian/Ukraine war, Fitch Solutions has discounted government’s overused excuse.
It explains that, even before these external shocks hit the global economy, Ghana’s debt was above the sustainable level as measured against the International Monetary Funds threshold of debt to Gross Domestic Product ratio of 70 percent and below.
The international investors’ research firm argue that, Ghana went back to the international capital market in early 2021 in desperation for cash. This attracted investors to take advantage of the sweet rates Ghana was selling its Eurobonds, this led to investor investors oversubscribing Ghana’s bonds which later resulted in currency sell off, and afterwards the country started witnessing symptoms of hiding chronic economic disease of escalating exchange rate and inflation since early 2022
“I think the answer is, it’s been aggravated by the Covid-19 pandemic and the war in Ukraine. Those two are not the only cost to Ghana’s woes”, Senior Country Risk Analyst, Mike Kruiniger, responding to a question at a recent Sub Saharan Africa Macroeconomic Update event said. “Both external and internal shocks caused the macroeconomic imbalances in the country.”
“Ghana’s debt servicing costs were already rising pretty rapidly prior to the pandemic with the government having to work on pretty large scale of spending projects including restructuring of the banking sector and providing free secondary education to everyone in Ghana”, he explained.
Mr. Kruiniger also blamed the high borrowing on the international capital market as one of the country’s problems.
“Ghana went back to the international capital market in early 2021, with this seamless desperation for cash. Investors started to flood the country which led the currency to sell off and after that, we’ve seen all the problems that Ghana has been facing since early 2022”.
He concluded that though the Covid-19 and the Russian Ukraine war have contributed to Ghana’s crisis, they are not only the reasons behind Ghana’s economic challenges.
Meanwhile, the Institute of Economic Affairs pointed that indiscipline in managing the country’s finances has caused the high fiscal deficits and consequently high inflation and currency instability, forcing innocent Ghanaians and businesses to pay for the mismanagement.
The think-tank expressed it worry in a paper published and titled “Institutionalising Fiscal Discipline and Macroeconomic Stability for Sustained Growth in Ghana: The Constitutional Pathway.”
Lead Researcher at the Intitute, Dr. John Kwakye, noted that Ghana has a long history of fiscal indiscipline and this is evident in its fiscal deficits being almost consistently higher than those of its peers in Africa.
“Our deficits tend to escalate in election years when we elevate election-related spending. Then we borrow to finance the deficits and cause our public debt to escalate to unsustainable levels. We have been in that situation numerous times. Our debt reached the first crisis situation around 2004, when it ballooned to over 100% of GDP”.
“We had to seek relief under the HIPC Initiative, which caused the debt-to-GDP ratio to drop to a sustainable level of 26% in 2006. Thereafter, we returned to our culture of fiscal indiscipline, which caused the debt to rise yet again. And today, the debt-to-GDP ratio is back to an unsustainable level of over 100%”, he explained.
He added that the country must do everything possible to safeguard or institutionalise fiscal discipline under the constitution, else it will always record macroeconomic instability.
Also, associated with the high fiscal deficits has been high inflation and currency instability, which the IEA called for immediate action.
According to Dr. Kwakye, Ghana has had much higher inflation rates than its peers, adding, the cedi has experienced much higher depreciation over the years.
Again, he said “government domestic borrowing to finance the deficits has elevated interest rates to levels that have crowded out the private sector, inhibiting investments and stifled economic growth. High fiscal deficits and the associated demand pressures have also spilled over to the external sector, leading to high current account deficits”.
The economist opined that, prevalent fiscal indiscipline and its associated macroeconomic instability, and over-borrowing to spend on goods and services are what have taken the country to the IMF about 17 times.
“We have been caught up in an unending cycle of high fiscal deficits, high interest rates, high inflation, high current account deficits, rapid exchange rate depreciation, and unstable growth. It is our prevalent fiscal indiscipline and associated macroeconomic instability and debt crises that have taken us to the IMF seventeen times”.
The Government of Ghana’s 2023 budget, which expects to expend GH¢205.4 billion, has been described as ‘the most expansionary’ budgets in Ghana’s history, by Fitch Solutions.
In its latest February 2023 Africa Monitor Report, Fitch indicated that, the government would be spending a lot amidst looking at executing austerity measures.
The government, in this year’s budget aims to implement some expenditure reforms, including employment freeze for public servants and placing a cap on salary adjustments at state-owned enterprises, yet, the budgeted expenditure of government is too huge.
“The Finance Minister did not announce large-scale spending cuts”, Fitch Solutions has observed in its newest report.
“Indeed, the government aims to keep capital expenditure and grants to government units elevated – areas that we had expected the authorities would cut back on”, the report said.
“As such”, it noted, “the government aims to spend a total of ¢205.4 billion, a 51.5% increase on the 2022 target, making the 2023 budget one of the most expansionary budgets in Ghana to date”.
Also, Fitch Solutions projects a budget deficit of 7.5% of Gross Domestic Product (GDP) in 2023 — higher than its earlier forecast of 6.7%.
Fitch noted that stronger tax collection will improve outlook in 2023 but spending will remain high.
Fitch Solutions emphasised that the 2023 budget details spending targets that were “more expansionary than we had anticipated, suggesting the budget deficit will remain wider for longer”.
Government of Ghana has expressed optimism to secure a successful implementation of an external debt restructuring after successfully completing a Domestic Debt Exchange Programme (DDEP).
The completed DDEP, aimed at alleviating the country’s debt burden in a transparent and efficient manner, would help pave the way for a much-needed external debt restructuring programme.
As government jubilate, Fitch, an international rating agency, is skeptical about the deal’s efficiency, as it has described Ghana’s debt exchange programme as a distressed one. This is under its criteria, given this material reduction in terms vis-à-vis the original contractual terms, and given that the exchange is needed to avoid a traditional payment default. But, the Minister of Finance is confident that the DDEP will build momentum for the country’s external debt restructuring programme.
“The DDEP, part of the government’s broader fiscal policy to address the country’s current macroeconomic challenges, restore macroeconomic stability and put Ghana on a sustainable path to growth and development, has ended with 85% participation”, Ken Ofori-Atta said when addressing Parliament, last week.
“This success, will also build momentum for the external restructuring programme, which has also commenced.”
He said as part of this process, Ghana has officially asked its bilateral creditors for a Debt Treatment initiative under the G-20 Common framework.
Mr. Ofori-Atta also stated that negotiations had already begun with commercial creditors, with the establishment of a Creditor Committee to assess Ghana’s request for debt treatment under the Common Framework expected by the end of February.
He acknowledged the importance of the DDEP in helping the government meet its debt sustainability target of 55% of debt-to-GDP in present value terms by 2028.
“The Government recognises the continued importance of the DDEP in closing the financing gap and enabling the government to meet the debt sustainability target,” said Ofori-Atta.
With the successful completion of the DDEP, Ghana is hoping to make headway in restructuring its external debt and reducing its debt burden in the long term.
Apparently, according Fitch’s sovereign rating criteria, a ‘Rating Default’ rating is consequently assigned to the Long-Term Local Currency Issuer Default Rating.
Among the 67 eligible bonds that could be tendered, six are rated by Fitch. A ‘D’ rating has been assigned to these six bonds.
A GH¢4.2 billion principal payment was due on February 6, 2023.
But in the second amended and restated exchange memorandum released on Feb. 7, authorities announced that eligible holders holding this bond would not receive a final interest payment and a final principal payment, regardless of whether an eligible holder has tendered or not.
But in a press release issued by the Finance Ministry on February 14, 2023, the authorities announced that coupon payments and maturing principals would be honoured “in line with government fiscal commitments.”
This announcement, Fitch, said does not clarify yet when the payment will be made to holders who opted out of the domestic debt exchange. In particular, it does not clarify whether a principal payment will be made before the expiration of the grace period for this specific issue. This security is one of the six issues that have been downgraded to ‘D’.
