Ghana to Face Liquidity Pressures in 2025, 2026 Despite Restructuring Most of Its Debt – Fitch
Ghana is set to face significant liquidity challenges in the coming years, even after restructuring the majority of its debt, according to a recent report from Fitch Ratings. The country, which has been grappling with high levels of debt and inflationary pressures, is expected to experience financial strain in 2025 and 2026, despite efforts to stabilize its fiscal situation.
In 2023, Ghana embarked on a comprehensive debt restructuring program to manage its mounting debt burden. This included negotiations with both domestic and international creditors to restructure approximately $18 billion in external debt and $13 billion in domestic debt. The restructuring was aimed at alleviating some of the fiscal pressure, providing Ghana with more time to repay its obligations, and helping to restore investor confidence.
However, according to Fitch, while the restructuring has provided some immediate relief, it may not be sufficient to avoid liquidity pressures in the medium term. The country’s debt remains substantial, and the economic recovery is likely to be slow. Ghana’s fiscal deficits have been high, and its economy has been struggling to recover from the impacts of the COVID-19 pandemic, rising commodity prices, and the global inflationary environment. This ongoing fiscal imbalance means that even with the debt restructuring, Ghana's capacity to meet its financial obligations will continue to be constrained.
Fitch highlights that the country’s external liquidity position remains fragile. Although the government is working on strengthening its foreign exchange reserves and securing international financial assistance, such as from the International Monetary Fund (IMF), the level of reserves may still fall short of the country’s debt servicing needs in the short term. This could result in delays or challenges in meeting both foreign and domestic debt obligations.
The credit rating agency warns that Ghana's external debt repayments in 2025 and 2026 will put significant pressure on its fiscal balance. The government will need to carefully manage its debt servicing commitments while also investing in critical areas such as infrastructure and public services. The path forward requires strong fiscal discipline, sustained growth, and continued support from international partners.
In conclusion, while Ghana has made strides toward managing its debt through restructuring, the country is far from being out of the woods. Liquidity pressures are expected to persist in the coming years, requiring careful fiscal management and external support to avoid further economic turmoil.
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