Ghana is expected to wrap up its external debt restructuring by June 2024, according to the latest assessment by ratings agency Fitch. The UK-based firm anticipates that Ghana will finalize its external debt restructuring programme with the Eurobond holders by mid-2024, following an agreement reached with bilateral creditors in January.
Fitch noted that the debt restructuring terms with Ghana’s official creditors are unlikely to have a significant impact on the banking sector. This is because Ghanaian banks have limited exposure to Eurobonds and have likely already accounted for impairments.
While the quality of loans at banks remains at risk due to the macroeconomic implications of a sovereign default, Fitch emphasized that the banking sector’s exposure is minimal due to the relatively small size of the loans. However, the agency cautioned that capitalization is sensitive to Ghana’s local-currency creditworthiness, as banks have a high exposure to local-currency government bonds relative to their capital.
Despite potential risks, Fitch’s assessment suggests that Ghana’s banking sector remains resilient amidst the ongoing debt restructuring process. With careful management and oversight, Ghana is poised to navigate its external debt challenges and emerge stronger in the coming years.
