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Ghana’s headline inflation rate declined to 53.6% year on year in January 2023 after hitting a more than two-decade high of 54.1% in December, the statistics service said on Wednesday (February 15, 2023).
Consumer price index drops amidst debt exchange programme with investors, a development that Fitch Ratings said will impact local banks significantly.
The government is battling with worst economic crisis in years as capital outflows, currency pressures and a crushing debt-service burden wreak havoc on public finances.
The government on Tuesday (February 14, 2023) announced the closure of a long-delayed domestic debt exchange plan, but it must now restructure its external obligations before obtaining executive board approval for a $3 billion rescue package from the International Monetary Fund.
Debt exchange to ‘significantly weaken’ some banks – Fitch
A domestic debt exchange implemented by Ghana will “significantly weaken” banks’ capitalisation, leading to material shortfalls at some, ratings agency Fitch said on Wednesday (February 15, 2023).
The exchange, which extended maturity dates on a range of bonds due in 2023 to between 2027 and 2033 and swapped other bonds for 12 issues maturing between 2027 and 2038, is part of a restructuring of domestic and external debt that is a condition of a $3 billion International Monetary Fund (IMF) bailout.
Fitch said it had estimated the original terms of the exchange would inflict a net present value loss on creditors of about 50%. “The final terms provide only a small reduction in this,” it said.
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