The International Monetary Fund (IMF) has urged Ghana to sustain quarterly electricity tariff adjustments as part of efforts to reduce fiscal risks and improve the financial sustainability of the energy sector.
The Fund said although the sector’s financial shortfall declined from US$1.6 billion in 2024 to US$1.4 billion in 2025, it continued to pose a significant burden on public finances.
The IMF made the recommendation in its 2026 Article IV Consultation and Sixth Review under the Extended Credit Facility (ECF), stressing the need for sustained reforms to consolidate recent gains in the sector.
“Despite progress, challenges remain in transforming the sector from a source of fiscal risks to a driver of inclusive growth,” the Fund said.
It attributed the improvement in the sector’s financial position to electricity tariff adjustments, improved revenue collection by the Electricity Company of Ghana (ECG), reduced reliance on liquid fuels for power generation, cedi appreciation and increased payments to energy suppliers through the Cash Waterfall Mechanism.
However, the IMF projected the sector’s financing shortfall at about US$1.1 billion in 2026, citing high collection and distribution losses and costly power generation contracts as major factors.
The report noted that the Public Utilities Regulatory Commission (PURC) reduced electricity tariffs by 4.81 percent in April 2026 before increasing them by 3.49 percent in July 2026 under the quarterly tariff adjustment mechanism.
The Fund said maintaining the tariff adjustment framework was critical to narrowing the energy sector’s financing gap, improving cost recovery and strengthening the sector’s capacity to meet financial obligations to independent power producers (IPPs) and fuel suppliers.
The IMF also acknowledged government’s efforts to reduce legacy debts in the energy sector.
It said net payables owed to IPPs and fuel suppliers declined to US$1.7 billion by March 2026 from US$2.1 billion at the end of 2024, following debt renegotiations and payments through government interventions.
According to the report, the government secured savings through the renegotiation of power purchase agreements and legacy debt obligations, while making substantial payments to energy suppliers, including those associated with the Sankofa gas project.
The IMF recommended strict adherence to quarterly tariff reviews, regular publication of audit reports on ECG’s revenue collection accounts and full implementation of the Cash Waterfall Mechanism.
It further identified increased private-sector participation in electricity distribution as an important reform needed to improve efficiency and reduce losses.
The Fund said a transaction adviser had been appointed to facilitate the procurement of concessionaires, with the concessions expected to be awarded by June 2027.
It said private-sector participation could help reduce technical and commercial losses, improve revenue mobilisation and strengthen operational efficiency within the electricity distribution system.
The IMF stressed that achieving a financially sustainable energy sector would require continued policy discipline and reforms beyond the current IMF-supported programme.
It said a more efficient and financially sound energy sector was essential to supporting economic growth, attracting investment and reducing pressure on public finances.
