Global ratings agency Fitch has cautioned that Ghana’s improved credit rating could face renewed downward pressure if fiscal or external risks materialise, even as the country moves closer to completing its external debt restructuring process.
Fitch Ratings on Sunday upgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-’ from ‘Restricted Default’ (RD), citing the government’s progress in restoring relations with commercial creditors and normalising debt obligations. The outlook for the rating is stable.
However, in a detailed commentary accompanying the rating action, the agency flagged several downside risks that could threaten Ghana’s sovereign credit profile if not carefully managed.
Potential Triggers for Downgrade
Chief among Fitch’s concerns is the potential for renewed liquidity pressures. The agency noted that a failure to implement effective fiscal consolidation, or the emergence of previously unaccounted-for contingent liabilities, could strain the government’s ability to meet its debt obligations.
Another key risk involves refinancing challenges. Should Ghana struggle to reopen its local-currency bond market—as currently assumed by Fitch—the sovereign could face difficulty rolling over short- to medium-term maturities, undermining investor confidence.
Additionally, the agency warned that external sector vulnerabilities could re-emerge if current account deficits widen again or if there is a significant decline in international reserves. Despite recent improvements, Ghana’s reserve cover remains below the median for similarly rated countries.
Public Finance Fragilities
Although the government has targeted a 1.5% primary surplus for 2025, Fitch forecasts a more modest 0.5% due to persistent inflation-related spending pressures. The overall fiscal deficit is projected to decline to 3.6% of GDP in 2025 from 7.9% in 2024, but Fitch stressed the importance of sustaining this fiscal path to avoid renewed imbalances.
The interest-to-revenue ratio—a key indicator of fiscal strain—remains high at a projected 26% in 2025, well above the ‘B’ and ‘C’/’D’ medians of 13% and 16% respectively. Rising coupon payments on domestic restructured bonds and resumed payments on external commercial debt are contributing factors.
Conditions for Further Upgrades
Conversely, Fitch noted that Ghana could see further rating improvements if it demonstrates a sustained decline in debt-to-GDP levels supported by credible and consistent fiscal consolidation. Successful rebuilding of fiscal buffers and continued macroeconomic stability could also enhance the country’s creditworthiness.
The agency highlighted international reserve accumulation as another important indicator. Reserves rose to USD 6.8 billion in 2024, and Fitch expects further growth in 2025 and 2026. A sustained buildup toward the ‘B’ median of 4.9 months of import cover would reinforce confidence in Ghana’s repayment capacity.
ESG and Governance Impact
Ghana’s governance indicators, particularly political stability, rule of law, and corruption control, continue to weigh on its credit profile. Fitch assigned an ESG Relevance Score of ‘5’ for these metrics, reflecting their strong influence on the rating outcome. Ghana’s percentile ranking remains at or below the 50th percentile in these categories, limiting further upward momentum in the rating.
Despite these constraints, Fitch recognised Ghana’s relatively stable political environment and institutional capacity as supportive elements, especially following a peaceful election cycle and ongoing policy reforms.
