Ghana’s lack of access to international markets as a result of investor fears about the likelihood of fiscal consolidation could lead to macroeconomic stress and pressure on liquidity if timely support from the IMF is not sought. In a statement released by Fitch, the credit rating agency also warned about non-resident investors in the local bond market selling their holdings, with consequences for the country’s reserves.

The agency estimates that the government will require gross external financing of $7.3bn in 2022, making access to international capital markets crucial. It justified it’s downward revision of the country’s sovereign rating from B with a Stable outlook to B with a Negative outlook in June 2021 by pointing to an insufficient pace in fiscal consolidation.

Fitch’s statement comes days before a highly anticipated budget statement to be delivered by Ghana’s finance minister, Ken Ofori Atta. Expectations are that the budget will provide clarity on the government’s fiscal consolidation plans as well as measures to boost growth which has been sluggish as a result of the COVID-19 pandemic.

Although Fitch notes that the government has no plans to seek an IMF Programme, pressure from investors, the normalization of the US Fed’s monetary policy and a rapidly depreciating cedi could force its hand.