Ghana‘s ongoing external debt restructuring has had a minimal effect on the capitalization of the country’s banking sector compared to the significant impact of the Domestic Debt Exchange Programme (DDEP), according to Fitch Ratings.
The rating agency highlighted that regulatory forbearance continues to mask the full capital impact of the DDEP. By phasing certain losses into regulatory capital and inflating the valuation of the new government bonds issued under the programme, the true extent of capital strain remains understated.
Despite these challenges, Fitch noted that the outlook for Ghanaian banks is improving as solvency levels recover from the sovereign default and risks tied to the operating environment begin to ease. The nearing completion of Ghana’s external debt restructuring and signs of economic stabilization are key contributors to this positive trend.
“These themes underpin our ‘improving’ outlook for the banking sector in 2025. High Profits Driving Capital Recovery: Ghana’s banking sector delivered strong profits in 2023 and 2024 as a result of high yields on government securities,” Fitch stated.
As the sector navigates the lingering effects of the DDEP, the focus will likely remain on maintaining profitability and leveraging economic stabilization to restore full capital strength.
Last Updated on March 16, 2025 by samboad
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