UK-based rating agency Fitch anticipates that both Ghana and Zambia will successfully emerge from default on their foreign currency debt during 2024.
This is contained in its recently released “Regional Sub-Saharan African Sovereigns Outlook 2024.”
The report emphasized the expectation of gradual fiscal consolidation driven by financing constraints and fiscal reform efforts, often tied to International Monetary Fund (IMF) programs.
Fitch states, “We forecast gradual fiscal consolidation due to financing constraints and fiscal reform efforts, which, in many cases, are linked to IMF programs. This consolidation will help government debt/GDP to broadly stabilise.”
The rating agency expressed confidence that Ghana and Zambia will navigate their debt restructuring processes, albeit acknowledging the vulnerability to potential delays under the Common Framework.
Despite the positive outlook for the two African nations, Fitch points out that financing challenges will persist for most Sub-Saharan African sovereigns, as affordable access to international capital markets remains a hurdle without credit enhancements.
The report underscores the importance of multilateral funding as a crucial support mechanism across the region, while also highlighting persistent downside risks.
“The macro outlook for sub-Saharan Africa (SSA) in 2024 points to stable median real GDP growth and lower average inflation, which nonetheless remains high across several sovereigns,” notes Fitch, reflecting on the broader economic landscape in the region.