News Guide Africa

Tag: Fitch Ratings

  • Analysts clash over Ghana’s 2026 growth trajectory …as Fitch warns of geopolitical headwinds but Standard Bank sees expansion

    Analysts clash over Ghana’s 2026 growth trajectory …as Fitch warns of geopolitical headwinds but Standard Bank sees expansion

    By Adnan Adams Mohammed 

     

    International rating agency Fitch Ratings and financial powerhouse Standard Bank Research have presented sharply divergent forecasts for Ghana’s economic performance, sparking a lively debate among local policymakers and investors over the trajectory of the country’s post-restructuring recovery.

    While Standard Bank Research has upgraded its baseline projection, predicting robust Gross Domestic Product (GDP) expansion between 5.9% and 6.1%, Fitch Ratings has taken a more conservative stance, projecting a moderate cooling of economic momentum to 5.0%.

    The differing outlooks highlight a tension between structural domestic gains and intensifying external global shocks.

    Standard Bank: Structural Reforms Anchor Optimism

    Standard Bank’s optimistic forecast relies heavily on a stronger-than-expected 2025 baseline, during which the Ghanaian economy expanded by 6.0%, outpacing initial consensus estimates.

    Speaking at a market landscape webinar organized by Stanbic Bank Ghana, Jibran Qureishi, Head of Africa Research at Standard Bank, argued that key structural transformations and aggressive infrastructural execution will cushion the nation from global market turbulence.

    “Given the base has changed now and is higher than we had expected, we still believe that growth in 2026 will be between 5.9% and 6.1%, with potential to pick up to between 6.2% and 6.3% in 2027,” Qureishi stated. “Regardless of risks such as tensions in the Middle East, Ghana’s economy would still expand due to some structural changes and investments on the ground.”

    Qureishi pointed to a major wave of public and private capital spending, including the newly commissioned Tema Port expansion, the ongoing reconstruction of Kumasi Airport, and the expansion of the Accra-Tema Motorway, as critical economic catalysts. Furthermore, he noted that the newly established gold board’s strict oversight will successfully curb illicit leakages in artisanal mining, driving formalized investments back into the extractive sector.

    Fitch: Geopolitical Shocks Face Sub-Saharan Resilience

    Conversely, Fitch Ratings expects a slight deceleration from 2025’s 5.9% mark, pinning its conservative 5.0% growth forecast on an unpredictable global energy market and escalating geopolitical disruptions.

    According to Fitch’s latest analytical brief, the widening dimensions of international conflict serve as a critical test for Sub-Saharan African (SSA) oil-importing sovereigns. The agency warned that the transmission channels of these external conflicts, primarily spiked refined petroleum costs and potential fertilizer shortages, will inevitably apply friction to domestic production.

    “Our baseline forecasts are for real GDP to grow in all Fitch-rated SSA sovereigns this year… but some oil importers are exposed to a supply shock,” Fitch Ratings detailed in its report. The agency added that while improvements to monetary, fiscal, and macroeconomic policy settings since 2022 have significantly enhanced the region’s overall structural resilience, “the war’s impact will test its depth and durability.”

    Despite projecting a growth slowdown, Fitch noted that Ghana’s macroeconomy is confronting these external vulnerabilities from a position of relative stability. Thanks to central bank intervention strategies and a strong gold price rally, improved exchange-rate flexibility and built-up international reserves have provided fiscal authorities with a vital cushion against rapid inflationary pass-throughs.

    The New ‘Low Beta’ Economy

    The conflicting numbers come at a time when Ghana’s relationship with international capital markets has fundamentally shifted. Standard Bank’s data reveals that foreign investor participation in Ghana’s domestic debt market has plummeted to below 5%, down from nearly 40% in the pre-pandemic era.

    While this capital flight presents deep challenges for securing external financing, economists note it has paradoxically insulated the local economy from global portfolio volatility. By operating as a “low beta market,” Ghana’s domestic growth drivers are increasingly tied to internal output rather than the whims of international hot money.

    As the state navigates the year, the ultimate growth outcome will depend on whether local infrastructure and resource formalization can outrun the compounding costs of global supply chain disruptions.

     

     

  • Global oil crisis triggers Fitch growth downgrade …BoG declares Ghana’s buffers secure against price shocks

    Global oil crisis triggers Fitch growth downgrade …BoG declares Ghana’s buffers secure against price shocks

    By Adnan Adams Mohammed 

    International ratings agency Fitch has downgraded its 2026 global economic growth forecast to 2.4%, down 0.2 percentage points from its previous estimate, citing the severe inflationary pressures and trade disruptions caused by the ongoing US-Iran conflict.

    Central to the revised outlook is a sharp escalation in energy costs, with Fitch boosting its 2026 average price assumption for Brent crude to $87 per barrel, up from the $70 benchmark projected earlier this year. The agency attributes the adjustment to the prolonged 14-week closure of the critical Strait of Hormuz shipping lane, which analysts do not expect to begin reopening until July.

    “The oil price shock is hitting world growth prospects and increasing downside risks,” stated Brian Coulton, Chief Economist at Fitch Ratings, in the agency’s June Global Economic Outlook report. “Forecast cuts have been widespread as higher inflation squeezes real wages, dampens consumption, and raises companies’ input costs.”

    The downgraded global growth trend poses significant fiscal hurdles for emerging markets, particularly net oil-importing nations facing a dual onslaught of higher importing bills and tightened global credit conditions. Under a worse-case scenario modeled by Fitch where crude spikes to $100 per barrel growth indicators for major economies could plummet further, heavily disrupting global trade dynamics.

    BoG Defends National Resilience

    In a swift counter to growing domestic anxieties over the ripple effects of the international energy crisis, the Bank of Ghana (BoG) has mounted a robust defense of the local economy. Management contends that deliberate, defensive monetary policies executed over the past year have successfully insulated Ghana from the worst of the external shocks.

    Speaking at the 10th Ghana CEO Summit in Accra, the Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, insisted that Ghana is structurally equipped to withstand the global oil volatility without suffering catastrophic macroeconomic slippages.

    “Ghana’s ability to cushion the impact of recent economic shocks triggered by escalating tensions in the Middle East is the result of deliberate efforts to build strong international reserves,” Dr. Asiama declared to industry executives. “Through disciplined policy implementation, inflation has moderated significantly. Exchange rate conditions have stabilized, reserves have strengthened considerably, and confidence has rebounded in the economy.”

    Dr. Asiama revealed that aggressive domestic reserve accumulation programmes implemented throughout late 2025 have provided the central bank with the exact strategic depth required to navigate the current global supply chain bottlenecks.

    “The current global crisis validates the central bank’s decision to build up reserves,” the Governor noted. “That is why we are able to stem the impact of the ongoing crisis even better than some of our peer countries, all because we built the reserves and we built resilience.”

    Guarding Against Complacency

    Despite the confident outlook, the central bank cautioned market actors against complacency. The persistent closure of the Strait of Hormuz continues to exert latent pressure on global logistics, meaning import-reliant business models will still face elevated input costs over the short term.

    “Stability must never be taken for granted,” Dr. Asiama warned. “The recent geopolitical tensions in the Middle East remind us that the global environment remains highly uncertain.”

    Fitch’s analytical teams noted that while the oil crisis is a formidable headwind to global GDP expansion, the broader economic fallout is being partially softened by unprecedented, high-momentum investment in artificial intelligence and corporate IT infrastructure, which is keeping world trade afloat.

    For Ghana, the coming months will test the limits of the central bank’s reserves. The state must successfully deploy its built-up buffers to maintain exchange rate stability and anchor domestic price expectations, preventing the international $87-a-barrel crude pricing pressure from triggering a fresh wave of domestic inflation.

     

  • Oil price “war shock” threatens steady growth …Global markets on edge

    Oil price “war shock” threatens steady growth …Global markets on edge

    By Adnan Adams Mohammed

    The world economy stands at a precarious crossroads. While global growth has proven remarkably resilient through 2025, a new and volatile “oil price shock” sparked by the US-Israel-Iran conflict now threatens to derail the recovery.

    In its latest March 2026 Global Economic Outlook (GEO), Fitch Ratings suggests that while steady growth is still possible, the margin for error has narrowed to a razor-thin edge.

    Despite a barrage of geopolitical tensions and shifting US trade policies, the global economy closed 2024 with a growth rate of 2.7%, nearly touching its long-run average. This was fueled by:

    AI Revolution: A massive surge in artificial intelligence-related investments;

    Fiscal Stimulus: Significant deficit spending in both the US and China; and

    US Consumption: Strong household spending bolstered by equity market gains.

    Fitch has even revised its 2026 world growth forecast upward to 2.6% (from 2.4%), assuming the current spike in oil prices is “short-lived.”

    The “Hormuz” factor: US$100 oil and beyond

    The optimism of the forecast is currently being tested by the reality of the Strait of Hormuz. Following the outbreak of hostilities on February 28, the critical waterway which carries 20 million barrels of oil per day is effectively closed.

    On Thursday last week, Brent crude surged over 9%, climbing back above the US$100-per-barrel mark to settle near US$99.44. This jump occurred despite the International Energy Agency (IEA) announcing a record-breaking release of 400 million barrels from strategic reserves.

    “It is a sticking plaster on a much bigger problem,” says Bill Farren-Price of the Oxford Institute for Energy Studies. “We’re losing about 20 million barrels a day… 400 million is a lot, but in the context of a market that consumes 100 million a day, you can see the challenge.”

    The worst-case scenario

    Fitch warns that if oil prices hit US$100 a barrel and stay there, the global impact will be severe:

    GDP Loss: World GDP would be slashed by 0.4% within a year.

    Inflation Spike: Europe and the US could see inflation jump by 1.2 to 1.5 percentage points.

    Interest Rate Reversal: In the UK and US, hopes for interest rate cuts are evaporating, with analysts now warning of potential rate rises to combat energy-driven inflation.

    The fallout is already being felt on the ground.

    China: Growth is forecast to slow to 4.3% as export growth cools.

    The Philippines & Thailand: Long queues have formed at petrol stations, and governments have implemented four-day work weeks or “work from home” mandates to conserve fuel.

    Eurozone: Higher energy prices are a “new headwind,” though fiscal easing in Germany offers a slight silver lining.

    The outlook

    The IEA’s emergency release the largest in history could add 4.4 million barrels per day to the market over the next three months. However, with Iran’s new Supreme Leader, Mojtaba Khamenei, vowing to keep the “lever” of the Strait of Hormuz closed, and the Revolutionary Guard warning of US$200-per-barrel oil, the “steady” growth predicted by Fitch remains under siege.

    For now, the world watches the Gulf. If the disruption is brief, the global engine keeps humming. If it drags on, the “war shock” of 2026 could become a global recession.

     

     

     

     

     

  • Deteriorating Public Finance: Fitch Downgrades Ghana’s IDR to ‘CCC’

    Deteriorating Public Finance: Fitch Downgrades Ghana’s IDR to ‘CCC’

    Adnan Adams Mohammed

    Fitch Ratings has downgraded Ghana’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to ‘CCC’ from ‘B-‘.

    The downgrade reflects deterioration of Ghana’s public finances, which has contributed to a prolonged lack of access to Eurobond markets, in turn leading to a significant decline in external liquidity.

    In the absence of new external financing sources, international reserves will fall close to two months of current external payments (debits in the current account) by end-2022. However, Fitch, typically, does not assign Outlooks to sovereigns with a rating of ‘CCC+’ or below.

    “Ghana faces USD2.75 billion of external debt servicing in 2022, including amortisation and interest, and USD2.8 billion in 2023”, Fitch Ratings estimates. “Access to external financing will remain tight, as Ghana is likely to remain locked out of Eurobond markets, which had come to be a regular source of external financing for the government.”

    “In 2022, we expect that the government will meet its external debt obligations, in part, through a combination of a USD750 million term loan from the African Export-Import Bank (BBB), USD250 million in syndicated loans from international commercial banks, and up to USD200 million from the government’s sinking fund.

    The 2022 mid-year policy review indicates that the government expects to source the rest from the IMF and other multilateral lenders. In the absence of an approved programme by the end of the year, the government would have to draw more heavily on its international reserves, which were USD7.6 billion, including oil funds and encumbered assets, as of June 2022.”

    The latest rating were on the following drivers: Increasing Possibility of Debt Restructuring; Tight External Debt Servicing Schedule; Uncertain Pace of Fiscal Consolidation; Domestic Debt Costs High; Weaker Near-Term Growth; among others.

    Uncertain Pace of Fiscal Consolidation: The government’s high interest costs and low revenue will continue to be impediments to fiscal consolidation efforts. The 2022 Budget’s medium-term fiscal framework had envisaged narrowing the deficit to below the existing deficit ceiling of 5% of GDP by 2024. The expected consolidation was based on the expiry of pandemic-related expenditure items and a significant increase in domestic revenue, driven by new taxes, including a levy on electronic transactions.

    Delays in implementing the new revenue measures have resulted in lower revenue and a larger nominal deficit in 1H22 relative to budget forecasts. However, the 2022 mid-year fiscal policy review presented in July contains an updated fiscal deficit forecast of 6.6% of GDP compared with the original deficit forecast of 7.4%, owing to an upward revision in nominal GDP. We forecast the 2022 fiscal deficit at 8.1% of GDP; this is inclusive of energy-sector clean-up costs not contained in the government’s figure. The possibility of new revenue measures could lead to a further shrinkage of deficit in 2023, but the government’s slim majority in parliament could frustrate attempts to raise tax rates or implement new taxes.

    Government interest costs reached 47.5% of revenue in 2021, considerably above the current ‘B’ median of 10.7%. We expect interest costs to remain at or above 45% through 2024.

    Interest costs largely reflect high yields on domestic debt. Yields have climbed higher in 2022, following inflation spikes and monetary tightening by the Bank of Ghana (BOG). Yields on the 91-day treasury bill reached 26% in July 2022, up from 12.6% in July 2021. Moreover, the government has reported under-subscribed yields, necessitating the tapping of existing medium-term issuance. The government has increased its outstanding advances with the BOG, providing some additional domestic financing and could conduct another private debt placement with the central bank as it did in 2020, but such a measure would necessitate parliamentary approval.

    The government has requested support from the IMF, which is likely to lead to additional financing from the IMF and other multilateral lenders. However, the government’s high interest costs and structurally low revenue as a percentage of GDP have increased the likelihood that IMF support would necessitate some form of debt treatment, although this is not our main scenario. The high interest burden on local-currency debt also means that the inclusion of a domestic debt treatment cannot be ruled out.

    In July 2022, the authorities reversed a long-standing position against seeking IMF support. Fitch believes that a deal with the IMF is likely within the next six months. We estimate that a programme could disburse as much as USD3 billion and unlock budget support from other multilateral lenders. However, the timing of such a deal is uncertain and would be dependent on the government’s ability to present a credible fiscal reform plan in line with increasing government revenue and improving debt affordability metrics. The most recent IMF debt sustainability analysis, conducted in 2021, found Ghana at a high risk of debt distress and vulnerable to shocks from market access and high debt servicing costs.