By Daniel Bampoe
Ghana’s path to macroeconomic recovery continues to gather momentum, with Fitch Ratings forecasting a significant decline in inflation and a sustained reduction in public debt over the next two years.
The global ratings agency’s latest analysis highlights stabilizing indicators across inflation, debt servicing, GDP growth, and foreign exchange reserves—largely attributed to tight monetary policy, recent currency appreciation, and fiscal discipline.
Inflation Outlook Signals Relief for Consumers
According to Fitch, Ghana’s average inflation rate is projected to fall to 15% in 2025 and further down to 10% in 2026.
This is a sharp improvement from the 23% average recorded in 2024 and marks a return to single-digit inflation territory not seen in several years.
The firm attributes this moderation to a strong appreciation of the Ghanaian cedi since April 2025, a trend that has helped reduce import costs.
Additionally, declining oil and global food prices, alongside a tight monetary stance by the Bank of Ghana, have all contributed to slowing inflation.
Notably, year-on-year inflation dropped to 18.4% in May 2025, the lowest since February 2022, continuing a five-month downward streak.
Transport costs and non-food inflation saw notable reductions, partly due to falling fuel prices.
Fitch expects the Bank of Ghana to begin cutting its policy rate starting July 2025, reflecting increased confidence in the inflation trajectory.
Public Debt to Return to Manageable Levels
On the fiscal front, Fitch forecasts a significant reduction in Ghana’s public debt burden.
The debt-to-GDP ratio is expected to drop to 60% by 2025 and remain at that level into 2026.
This is a remarkable reversal from the 93% peak in 2022, when Ghana announced its intention to default on external debt, triggering a wave of ratings downgrades.
The turnaround is attributed to a combination of nominal GDP growth, fiscal consolidation, and larger-than-expected exchange rate gains.
In 2024, the debt ratio had already fallen to 72%, setting the stage for further reductions.
Resilient Growth Amid Restructuring
Despite undergoing a complex debt restructuring process, Ghana’s economy has shown resilience.
Real GDP growth stood at 3.1% in 2023, rising to 5.7% in 2024, and is projected at 4% in 2025 and 4.5% in 2026.
The recovery is driven by a rebound in agricultural output—following years of declining cocoa production—and consistent gains in the industrial and services sectors.
Interest Payment Pressures Remain
Fitch also flagged that although Ghana’s interest-to-revenue ratio is stabilizing, it remains high at 26% for 2025 and 2026, up from 25% in 2024.
This figure is well above the 13% median for other ‘B’ rated economies and continues to be a structural constraint on Ghana’s credit profile. The increase is partly due to resumed payments on external commercial debt and rising coupon payments under the Domestic Debt Exchange Programme (DDEP), whose average coupon rate is set to climb from 5.4% in 2024 to 9.1% in 2025.
External Position Strengthens with Reserve Build-Up
In terms of external balance, Ghana is projected to maintain a current account surplus, though this is expected to narrow from 4.3% of GDP in 2024 to 1.1% by 2026, as economic activity fuels import growth and export prices ease.
Nevertheless, the surplus contrasts sharply with large deficits seen before 2022.
This surplus will enable Ghana to build up gross international reserves, which are forecast to reach 3.9 months of import cover by 2026, up from 2.6 months in 2024 and 1.6 months in 2022.
The improvement aligns Ghana closer to the ‘B’ median of 4.9 months.
Fitch notes that gold prices played a key role in boosting the current account surplus in 2024 and will remain a critical factor in external performance.
Credit Rating Rebound
The report comes on the heels of Fitch upgrading Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from Restricted Default to ‘B-’ with a Stable Outlook—a move that marks renewed investor confidence after years of fiscal stress.
