Fitch Ratings has highlighted the growing fiscal challenges faced by sovereigns, including Ghana, in 2025, as government bond yields rise despite major central bank policy rate cuts.
The impact on sovereign credit metrics will depend on the extent and duration of these increases, which reflect both monetary policy actions and broader economic factors.
In early 2025, yields in the US, eurozone, and UK surged, with US 10-year yields rising over 100 basis points since the Federal Reserve’s policy rate cuts in September 2024.
Fitch attributed this to inflation risks, upward pressure on real interest rates, and rising concerns over government bond issuance to meet borrowing needs.
The ratings agency warned that sustained increases in borrowing costs would make it harder for governments to reduce deficits and manage public debt.
Higher term premiums, driven by fiscal uncertainty or perceived credit risk, could worsen public debt dynamics compared to bond yields influenced by growth or inflation expectations.