Fitch Ratings, the American-British credit rating agency, has upgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from B- to B, with a Positive Outlook.
In a report released last Friday, Fitch attributed the upgrade to a sharp decline in Ghana’s public debt-to-GDP ratio, strong fiscal consolidation, appreciation of the cedi and growth in international reserves.
The agency identified key drivers of the improved rating as falling debt levels, reserve accumulation, large current account surpluses, primary fiscal surpluses and, despite improvements, still-high interest costs.
According to the report, Ghana’s public debt is projected to decline to 46 per cent of GDP next year, below the 2027 “B” median forecast of 51 per cent.
Fitch said the projection followed a 21-percentage-point decline in 2025, driven by the cedi’s sharp appreciation and sustained fiscal consolidation.
“The anticipated decline is supported by our forecast of continued, albeit lower, primary surpluses, still robust real GDP growth and narrowing real interest rates as macroeconomic conditions continue to normalise,” the report stated.
The agency also projected that Ghana would achieve 4.8 months of import and debt-service cover next year, exceeding the “B” median of 3.9 months, supported by continued accumulation of international reserves.
Fitch noted that reserve growth would be driven by large current account surpluses, net foreign direct investment inflows and disbursements from multilateral partners.
It added that unencumbered reserves rose by US$5.4 billion last year to US$12.3 billion, and indicated that favourable balance-of-payments trends and the formalisation of small-scale gold mining would further strengthen external buffers.
Fitch further forecast another strong current account surplus this year, following a record 8.2 per cent of GDP recorded last year, supported by expectations of sustained high gold prices.
However, it cautioned that lower gold prices and a higher import bill, driven by economic growth, could narrow the surplus next year, although it would still compare favourably with the projected “B” median deficit of 3.4 per cent of GDP.
On the fiscal front, Fitch expressed confidence that Ghana would meet its primary surplus target of 1.5 per cent this year and next year, following a 2.9 per cent surplus recorded last year.
It noted that improvements in public financial management had reduced the risk of short-term fiscal slippages.
The agency added that government measures, including temporary reductions in taxes and levies on hydrocarbon products, would keep fiscal costs below 0.1 per cent and could be offset by savings elsewhere.
Fitch also projected a moderate decline in Ghana’s interest-to-revenue ratio, although it is expected to remain high at about 20 per cent through 2027, compared with the “B” median of 14 per cent.
“The positive outlook reflects our expectation of continued fiscal prudence underpinned by improved public financial management, further normalisation of macroeconomic conditions, including a decline in inflation, and continued strengthening of external buffers,” the report emphasised.
BY BENJAMIN ARCTON-TETTEY
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