The International Monetary Fund (IMF) has called on the Ghanaian government to take urgent and decisive action to address long-standing inefficiencies in the energy and cocoa sectors.
This appeal comes as the IMF Executive Board approved the fourth review of Ghana’s US$3 billion Extended Credit Facility (ECF) programme, triggering the release of an additional US$367 million in support.
Although Ghana’s economy recorded stronger-than-anticipated growth through 2024 and early 2025, bolstered by performance in mining, agriculture, ICT, and manufacturing, the IMF warned that the country’s fiscal reform momentum faltered due to pre-election overspending and delays in key structural reforms.
Preliminary figures indicate a sharp rise in government arrears in the lead-up to the December 2024 elections.
Inflation surged to 23.8% by the end of the year, well above IMF targets and more than double the Bank of Ghana’s preferred ceiling. These slippages have strained the country’s economic credibility.
Nevertheless, the IMF has acknowledged early efforts by the new administration to regain control. It praised the 2025 national budget, which aims to deliver a 1.5% primary fiscal surplus through enhanced revenue collection and prudent spending.
IMF Deputy Managing Director Bo Li lauded these “bold corrective actions” but stressed that “forcefully addressing the challenges in the energy sector and tackling related arrears are critical to containing fiscal risks.”
Energy Sector: A Mounting Fiscal Threat
The power sector remains one of the most significant burdens on Ghana’s public finances. State-owned utilities continue to grapple with structural inefficiencies, including poor revenue collection, mounting legacy debts, and delays in implementing cost-reflective tariffs.
As of March 2025, the sector had accumulated debts of approximately US$3.1 billion. Meanwhile, an estimated additional US$3.7 billion is required to clear outstanding arrears entirely.
In response, Parliament is fast-tracking the Energy Sector Levy (Amendment) Bill, which proposes a GH¢1 increase on petroleum product levies. The government expects this measure to raise GH¢5.7 billion in additional revenue to help plug the gap.
Cocoa Sector Struggles Despite Global Price Surge
Despite historic price highs on the international cocoa market in early 2025 reaching over US$10,700 per tonne, Ghana’s cocoa sector has failed to capitalize fully due to domestic challenges.
Global prices later eased to around US$8,400 per tonne by mid-year, though still significantly above historical averages.
Furthermore, cocoa production and export volumes have underperformed. Factors such as aging tree stock, smuggling, fungal diseases, and shifting climate patterns have hindered output.
To address these issues, the government is reviewing COCOBOD’s operations, aiming to cut costs, improve transparency, and offer better incentives to farmers to stem cross-border smuggling.
Structural Reforms and SOE Efficiency Key to Recovery
The IMF stressed that improving the financial health and efficiency of state-owned enterprises, especially those in the energy and agricultural sectors is vital to the success of Ghana’s fiscal recovery.
The Fund’s latest review underscores the importance of tightening budget controls and aligning expenditure with available resources.
The Bank of Ghana has responded by tightening monetary policy to curb inflation and rebuild reserves.
It is also stepping up supervisory oversight, focusing on the recapitalisation and governance of weaker banks through a risk-based monitoring framework.
Meanwhile, the government’s debt restructuring efforts have made progress. Ghana has signed a Memorandum of Understanding with its official bilateral creditors under the G20 Common Framework and is in advanced negotiations with commercial creditors, adhering to the principle of comparability of treatment.
These combined actions have led to a modest improvement in Ghana’s international credit outlook, with rating agencies citing enhanced fiscal credibility and reform efforts.
However, the IMF warned that the path to sustained macroeconomic stability remains narrow and requires steadfast policy commitment.
