International ratings agency, Fitch Ratings, has upgraded Ghana's Long-Term (LT) Local-Currency (LC) Issuer Default Rating (IDR) to 'CCC' from 'RD'.

The upgrade of the ratings on Ghana's LC denominated debt follows the completion of the Domestic Debt Exchange Programme by Ghana in February 2023.

Fitch, however, viewed the transaction as a distressed debt exchange in a context of heightened fiscal pressures, with interest costs amounting to 54 per cent of revenues in half-year 2022, and lack of access to international capital markets.

Fitch in a report released on Wednesday said "the upgrade of Ghana's LTLC IDR follows the resumption of payments on LC bonds that cure the default on LC debt".

Despite this, the country still remains in the junk status.

Two principal payments on bonds issued prior to the domestic debt exchange were due on February 6, 2023 and February 20, 2023.

These payments, which remained due to holders who were either ineligible for the domestic debt exchange or who opted out of the domestic debt exchange, were made on March 13, 2023.

Fitch predicted that the domestic debt exchange would allow Ghana to reduce its interest payments in 2023 by around 10 per cent of expected revenues, or 1.6 per cent of Gross Domestic Product (GDP).

"Gross financing needs this year (2023) have been reduced by 5 per cent of GDP. In 2024, interest payments would be lowered by 6 per cent of revenues, or 0.9 per cent of GDP".

According to Fitch's forecast, the domestic debt restructuring together with the suspension of external debt service significantly reduced Ghana's cash fiscal deficit in 2023 to 4.5 per cent of GDP in 2023.