Home News Fitch Upgrade Masks Ghana’s Persistent Debt Challenges

Fitch Upgrade Masks Ghana’s Persistent Debt Challenges

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Professor Isaac Boadi

Fitch Ratings’ decision to upgrade Ghana’s Long-Term Foreign-Currency Issuer Default Rating to ‘B-‘ from ‘Restricted Default’ has drawn mixed reactions from financial experts, who warn the improved rating obscures underlying fiscal vulnerabilities.

While the move signals progress in Ghana’s debt restructuring efforts, analysts highlight that the country’s 26% interest-to-revenue ratio remains dangerously high and threatens economic stability.

Professor Isaac Boadi, Dean of the Faculty of Accounting and Finance at UPSA, provided critical context to Fitch’s assessment. “The stable projection of 26% interest-to-revenue ratio for 2025 and 2026 indicates Ghana is spending over a quarter of its income just to service debt,” he explained. This ratio significantly exceeds the 13% average for peer nations with similar credit ratings and suggests constrained fiscal space for essential development expenditures.

The elevated debt service burden limits Ghana’s ability to invest in critical sectors like healthcare, education and infrastructure. Compared to countries in the ‘C’ or ‘D’ rating categories that average 16%, Ghana’s 26% ratio reflects a more precarious financial position. This disparity raises concerns about debt sustainability, particularly if economic shocks reduce government revenues.

While the rating upgrade acknowledges Ghana’s commitment to fiscal reforms under its IMF program, economists caution that structural challenges persist. The improvement may provide temporary relief in financial markets, but without addressing fundamental revenue generation issues, Ghana risks remaining trapped in a cycle of high borrowing costs and constrained growth prospects.

Financial analysts note that such high debt service ratios typically lead to increased borrowing costs as lenders perceive greater risk, potentially triggering future downgrades. The situation underscores the need for sustained fiscal discipline and economic reforms to achieve lasting debt sustainability.



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