IMF cautions Ghana over energy sector despite progress made in paying energy debts

The International Monetary Fund (IMF) cautioned Ghana that despite progress made in the energy sector, challenges remain in transforming the sector from a source of fiscal risks to a driver of inclusive growth. According to the Fund, the energy sector shortfall remains sizeable estimated at US$1.1 billion in 2026, reflecting high collection and distribution losses and costly generation contracts with capacity charges and "take-or-pay" clauses. "Legacy debt remains large and its gradual clearance will take time and significant fiscal support. Institutional gaps (e.g., uneven enforcement of tariff adjustments and CWM [Cash Water Mechanism] guidelines) persist, leaving the sector prone to slippages, especially during electoral periods."

The energy sector's shortfall declined to US$1.4 billion (1.2% of Gross Domestic Product) in 2025 from US$1.6 billion (1.4% of GDP) in 2024. This reflected the combined effect of tariff adjustments, improved revenue collection at the Electricity Company of Ghana (ECG), higher payments to energy suppliers via the Cash Waterfall Mechanism, cedi appreciation, and reduced use of liquid fuel in the electricity generation mix. The Ministry of Finance also made payments of about US$2 billion to independent power producers (IPPs) and fuel suppliers, including the replenishment of the World Bank-guaranteed letter of credit for gas from the Sankofa field. The government secured savings from the renegotiation of Independent Power Producers Power Purchase Agreements (PPAs) and legacy debt. As a result, the stock of net payables to IPPs and fuel suppliers fell to US$1.7 billion at end-March 2026, from US$2.1 billion at end-2024.