![](\"http:\/\/www.ghanamma.com\/wp-content\/uploads\/2022\/11\/Fitch.jpg\")
<\/p>\n<\/p>\n
Rating agency, Fitch, sees more than 50% chance of Ghana defaulting on its debt repayment.<\/p>\n
According to the rating agency, the country\u2019s sovereign credit rating may face another downgrade closer to default, if talks with the International Monetary Fund for a $3 billion package lead to debt restructuring.<\/p>\n
Bloomberg is reporting that Ghana\u2019s creditworthiness may be downgraded to \u2018RD\u2019, from \u2018CC\u2019. The downgrade, it said, reflected the increased likelihood that Ghana will pursue a debt restructuring given mounting financing stress, with surging interest costs on domestic debt and a prolonged lack of access to Eurobond markets.\u00a0<\/p>\n
Fitch in September 2022 downgraded Ghana\u2019s Long-Term Local- and Foreign-Currency Issuer Default Ratings (IDRs) to further junk status or \u2018CC\u2019, from \u2018CCC\u2019.<\/p>\n
The Head of\u00a0EMEA\u00a0Sovereign Ratings, Jan Friederich, noted that if talks with the International Monetary Fund led to debt restructuring, the country risks a further downgrade.<\/p>\n
\u201cIf a debt restructuring is part of the agreement with the IMF, then, in terms of default risk, that will supersede any benefit from the financing support that Ghana might get from the IMF,\u201d Mr. Friederich is quoted by Bloomberg.<\/p>\n
Also, \u201ca restructuring would likely lead to the relevant rating being placed in restrictive default,\u201d he said.<\/p>\n
That rating is assigned to an issuer that, in Fitch\u2019s opinion, \u201chas experienced an uncured payment default or distressed debt exchange\u201d on a bond or loan but hasn\u2019t entered into bankruptcy or some other form of administration.\u201d<\/p>\n
Default Risk<\/strong><\/p>\n Ghana began formal negotiations for the extended credit facility programme with the IMF in September 2022 to bring stability in the economy, which has experienced rapid depreciation of its currency \u2013 the cedi, soaring inflation and interest rates.<\/p>\n This was after cutting 2022 discretionary expenditure by as much as 30%, failed to stop investors from dumping its Eurobonds.<\/p>\n Local Debt<\/strong><\/p>\n Bloomberg reported in September 2022 that Ghana was considering restructuring part of its 190.3 billion ($13.6 billion) of local debt, as part of the talks with the IMF. A committee was formed in October 2023 to solicit views from bondholders for a debt management strategy.<\/p>\n Some investment banks have since communicated to their clients that intent, advising them to avoid withdrawing or liquidating their investments since they may lose their interest.<\/p>\n \u201cWe would be looking at which part of the debt will be affected,\u201d Jan Friederich said.<\/p>\n \u201cThere are still open questions about what decisions they are going to make about the inclusion of local currency or foreign currency debt; we assume for the time being that both will be incorporated.\u201d<\/p>\n Ghana\u2019s 2030 dollar bonds may be excluded from any restructuring because they were partially guaranteed by the\u00a0World Bank, he said.<\/p>\n DISCLAIMER: <\/strong>The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" Rating agency, Fitch, sees more than 50% chance of Ghana defaulting on its debt repayment. According to the rating agency, the country\u2019s sovereign credit rating may face another downgrade closer to default, if talks with the International Monetary Fund for a $3 billion package lead to debt restructuring. Bloomberg is reporting that Ghana\u2019s creditworthiness may […]<\/p>\n","protected":false},"author":1,"featured_media":1245209,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[72],"tags":[8933,1580,2253,2145,85,11596,623],"class_list":["post-1245207","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-chance","tag-debt","tag-defaulting","tag-fitch","tag-ghana","tag-repayment","tag-sees"],"_links":{"self":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1245207","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/comments?post=1245207"}],"version-history":[{"count":0,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/posts\/1245207\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/media?parent=1245207"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/categories?post=1245207"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ghanamma.com\/2022\/wp-json\/wp\/v2\/tags?post=1245207"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}