Ghana’s mounting energy sector debt remains one of the biggest threats to the country’s economic recovery and could undermine spending on social protection and development programmes if longstanding inefficiencies are not addressed, experts have cautioned.
The warning was issued at ActionAid Ghana’s Economic Justice Dialogue, which brought together economists, policy analysts, civil society organisations and governance advocates to examine Ghana’s economic outlook beyond the current International Monetary Fund (IMF) Extended Credit Facility (ECF) programme.
The dialogue focused on strategies for achieving sustainable economic recovery while reducing the country’s dependence on repeated IMF interventions.
Executive Director of Transparency International Ghana, Mrs. Mary Awelana Addah, described the forum as timely, noting that Ghana’s repeated engagements with the IMF highlight the need for stronger accountability and fiscal discipline.
“Ghana has gone to the IMF 18 times. It is time we ensure that national development targets are achieved through effective public financial management. We have the laws and regulations, but enforcement remains a major challenge,” she said.
Energy Debt Continues to Pose Fiscal Threat
Speaking during the discussions, Mr. Samuel Bekoe of the Centre for Extractives Development Africa said Ghana’s energy sector continues to face deep-rooted structural challenges despite reforms introduced under the IMF-supported programme.
According to him, accumulated liabilities within the sector remain a significant burden on public finances and could jeopardise efforts to maintain macroeconomic stability after Ghana exits the IMF programme.
“The power sector privatisation programme remains partial and does not fully address the structural problems confronting the energy sector,” Mr. Bekoe stated.
He explained that the sector’s debt burden is driven by legacy liabilities, excess generation capacity payments, foreign exchange losses, fuel procurement costs and weak revenue collection systems.
Mr. Bekoe noted that government allocations of about GH¢1.4 billion for fuel purchases, operational expenses and debt servicing demonstrate the scale of the challenge. He estimated that Ghana’s cumulative energy sector debt exposure between 2023 and 2026 could approach US$9 billion, making it one of the country’s most significant fiscal risks.
“The energy sector debt remains one of the largest liabilities facing Ghana and continues to pose a major risk even as the country prepares to exit the IMF programme,” he said.
Reforms Deliver Some Improvements
Participants acknowledged that reforms implemented under the Energy Sector Recovery Programme have produced some positive results.
Mr. Bekoe indicated that stricter enforcement of the Cash Waterfall Mechanism has improved revenue mobilisation and payment discipline across the sector.
Data presented at the dialogue showed that monthly sector revenue collections have risen from approximately GH¢940 million to GH¢1.5 billion in 2025.
The Cash Waterfall Mechanism ensures transparent distribution of revenues among power producers, fuel suppliers, transmission operators and debt-servicing obligations.
“Before Ghana entered the IMF programme, implementation of the Cash Waterfall Mechanism was weak. Improved enforcement has helped stabilise some aspects of the sector,” he explained.
He also noted that the renegotiation and termination of certain underperforming Independent Power Producer contracts have reportedly reduced Ghana’s financial obligations by more than US$250 million.
Structural Challenges Persist
Despite these gains, experts warned that fundamental inefficiencies continue to threaten the long-term sustainability of the power sector.
Among the challenges identified were high transmission and distribution losses, inadequate tariff recovery, operational inefficiencies, irregular payments by some public institutions and exposure to foreign exchange risks under power purchase agreements.
Mr. Bekoe argued that continued reliance on public funds to absorb these inefficiencies without addressing their root causes could reverse recent economic gains.
“Providing funding without fixing the underlying problems only means we are paying for inefficiencies rather than solving them,” he said.
He warned that failure to undertake comprehensive reforms could eventually force Ghana into another IMF-supported programme.
“The more debt accumulates, the more government resources will be diverted from critical areas such as social protection and development programmes to debt servicing,” he added.
Call for People-Centred Economic Policies
ActionAid Ghana used the forum to advocate stronger public financial management, improved accountability and economic policies that prioritise citizens’ welfare.
The organisation expressed concern that rising energy sector liabilities could limit government spending on healthcare, education, livelihoods and social protection programmes, particularly those targeting women, young people and vulnerable households.
Country Director Mr. John Nkaw said increasing debt-service obligations risk widening inequality and weakening efforts to promote inclusive economic growth.
He therefore called for comprehensive reforms within the energy sector, stricter enforcement of existing regulations and transparent governance systems to safeguard public resources and support long-term development.
Participants concluded that while Ghana’s economy is showing signs of recovery, including easing inflation and relative exchange-rate stability, unresolved energy sector debts remain a significant threat to sustaining those gains and achieving durable economic resilience beyond the IMF programme.
