Fitch warns Ghana’s rating at risk without bond market reopening

Fitch Ratings has outlined several risks that could lead to a downgrade of Ghana’s credit rating, barely a week after upgrading the country’s Long-Term Foreign Currency Issuer Default Rating (IDR) to B- with a stable outlook.

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The international ratings agency cited renewed liquidity pressures, slow fiscal consolidation, and the possible failure to reopen the local bond market as key threats to Ghana’s credit profile.

Speaking in its latest assessment, Fitch noted that inability to refinance maturing debts, especially due to limited access to the domestic bond market, could severely impact investor confidence and Ghana’s ability to meet its short- to medium-term obligations.

Key downgrade triggers include:

1. Weak fiscal discipline or unaddressed contingent liabilities
2. Declining international reserves driven by current account deficits
3. Reduced refinancing confidence due to the continued closure of local bond markets

What Could Improve Ghana’s Rating?

Fitch added that a sustained reduction in the debt-to-GDP ratio, supported by a credible and well-executed fiscal consolidation plan, could lead to an upgrade.

1. Other positive indicators include:
2. Stronger implementation of macroeconomic reforms
3. A steady build-up of foreign reserves closer to the ‘B’ peer median
4. Enhanced ability to meet external debt obligations confidently

Country Ceiling and ESG Risk Factors

Ghana’s Country Ceiling remains aligned with its IDR at B-, reflecting minimal risks of capital controls or restrictions on currency conversion that would hinder debt servicing by private sector actors.

On the environmental, social, and governance (ESG) front, Ghana scored ‘5’ for Political Stability and Rights, signaling governance challenges that negatively influence its credit profile.

It also received a score of ‘4’ for Creditor Rights, meaning the willingness and ability to repay debt remains a significant concern, although this is common among sovereigns at similar rating levels.

Read also: Debt exchange, not reforms, behind Ghana’s ratings boost – Khalid – Awake News