Ghana and Zambia To Exit Default on Foreign-Currency Debt in 2024 - Fitch Reports

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In a recent release of their Regional Sub-Saharan African Sovereigns Outlook for 2024, Fitch, the rating agency, has expressed optimism regarding Ghana and Zambia's ability to recover from default on their foreign-currency debt. 

According to Fitch, both countries are expected to navigate through their debt restructuring processes, eventually marking an exit from default this year.

Related To This: Seek A Lengthy Debt Repayment Plan With China - US Finance Professor To Ghana

Fitch forecasts a gradual fiscal consolidation for these nations, primarily driven by financing constraints and ongoing fiscal reform efforts. Interestingly, these reform initiatives are often tied to IMF programmes, underlining the international influence and support shaping the recovery path for both countries. The anticipated fiscal consolidation is poised to contribute to a stabilization of government debt-to-GDP ratios.

Despite this positive outlook, uncertainties loom over the debt restructuring process as Fitch notes that the Common Framework-based approach in both Ghana and Zambia remains susceptible to potential delays.

Furthermore, Fitch's assessment for the broader macroeconomic landscape in sub-Saharan Africa for 2024 highlights stable median real GDP growth and a reduction in average inflation. However, it's important to note that inflation levels remain relatively high across several sovereigns within the region.

Fitch also underscores ongoing financing challenges, pointing out that most sub-Saharan African sovereigns face limitations in accessing international capital markets without the necessary credit enhancements. As a result, the availability of multilateral funding is anticipated to continue playing a pivotal role in supporting the region's financial stability.

READ ALSO: Dollar Scarcity Is Driving More African Nations Into Crisis.

While multilateral funding is expected to serve as a key pillar of support, Fitch emphasizes that risks persist and are tilted toward the downside. This suggests that despite the positive recovery expectations, there are lingering uncertainties and potential challenges that could affect the region's financial outlook in the near term.

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