ACCRA, March 22 (Reuters) – Ratings agency Fitch on Wednesday upgraded Ghana’s long-term local-currency issuer default rating to ‘CCC’ from ‘restricted default’, after the country started settling payments on outstanding local bonds following a domestic debt restructuring.

Ghana defaulted on most of its $29 billion external debt last year, as interest payments and inflation soared, and it still needs to negotiate a resolution with its private international bondholders and bilateral creditors.

The West African country has already restructured its domestic debt, which will lower its interest payments by 10% of the government’s expected revenues or 1.6% of GDP in 2023, and 6% of revenues or 0.9% of GDP in 2024, Fitch said.

Despite this immediate relief, the restructuring has increased Ghana’s debt-to-GDP ratio by 0.6 percentage points and the ratio is still above 100% after the process, it said.

Around 65% of eligible holders of Ghana’s 126.97 billion cedis ($10.5 billion) local bonds registered for its domestic bond exchange programme under its restructuring.

Fitch said it did not expect Ghana to get “financing assurances” – commitments from its external bilateral creditors to restructure the country’s debts – before the end of June.

These assurances are necessary for Ghana to secure access to a $3 billion International Monetary Fund loan. Ghana’s president said earlier in March he expects the IMF board to sign off on the money by the end of the month.

Ghana, which has signed up to restructure its bilateral debts under the G20’s Common Framework process, owes about $13 billion to international bondholders and also has bilateral debts with members of the Paris Club of creditor nations and China, to which it owes $1.9 billion.

($1 = 12.0500 Ghanian cedi)

Reporting by Rachel Savage and Anait Miridzhanian; Editing by James Macharia Chege and Himani Sarkar

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