Ghana has finally exited the $3 billion IMF Extended Credit Facility, but even before the dust could settle on the announcement, there are concerns about whether the country can maintain stability amid the threat from the inefficiencies of the State-Owned Enterprises (SOEs) sector.
The exit is viewed by many as a step toward economic consolidation. However, banking and governance consultant Dr. Richmond Atuahene warns that deep-rooted inefficiencies in State-Owned Enterprises (SOEs) could undermine fiscal stability in the post-bailout era.
In an analysis copied to The High Street Journal, the corporate governance consultant argues that while macroeconomic indicators may show short-term recovery, structural weaknesses within SOEs remain a major “hidden fiscal risk”.
These risks, he says, are capable of reversing gains through renewed debt accumulation, bailouts, and contingent liabilities.
Persistent Underperformance and Fiscal Risks in SOEs
Dr. Atuahene explains that a large share of Ghana’s SOEs continue to operate at a loss, creating continuous pressure on public finances. He mentions that key entities in the energy, utilities, and cocoa sectors have recorded recurring deficits, forcing government intervention through subsidies, equity injections, and debt absorption.
He also notes that companies such as the Electricity Company of Ghana (ECG) and Ghana Cocoa Board (COCOBOD) have been central to this burden, with inefficiencies such as technical losses, weak revenue collection, and price distortions contributing to persistent financial gaps.
In addition, he points to operational inefficiencies in utilities like the Ghana Water Company Limited, where significant production losses and low billing efficiency continue to reduce revenue recovery.
Ballooning Subsidies, Bailouts, and Contingent Liabilities
Another key concern raised by Dr. Atuahene is the growing scale of government support required to keep SOEs operational.
Dr. Atuahene explains that energy sector shortfalls alone have required multi-billion-cedi interventions, with ECG’s inefficiencies remaining a major fiscal drain.
He stresses that many SOE debts are not immediately visible on the government’s balance sheet but exist as contingent liabilities, guarantees that become public debt when defaults occur. This creates a “hidden debt pipeline” that can suddenly materialise during economic stress.
Governance Weaknesses and Structural Inefficiencies
According to the governance review cited in his analysis, many SOEs suffer from weak boards, limited managerial autonomy, poor disclosure practices, and fragmented oversight across multiple state institutions.
He further argues that political interference in appointments and procurement decisions has weakened accountability, while soft budget constraints have encouraged repeated reliance on state bailouts rather than operational reform.
These governance gaps, he warns, have allowed inefficiency to become systemic rather than incidental.
Post-IMF Risks: Return of Soft Budget Constraints
Dr. Atuahene cautions that after the IMF programme, enforcement discipline may weaken, increasing the risk that SOEs return to excessive borrowing backed by implicit government guarantees.
He explains that under IMF constraints, borrowing limits and guarantee caps helped contain fiscal risks. Without such controls, underperforming SOEs may once again accumulate debt in the expectation of future government rescue.
This, he warns, could reintroduce fiscal slippages and undermine debt sustainability efforts.
A Structural Threat to Fiscal Stability
Dr. Atuahene says that SOEs remain one of Ghana’s most significant post-IMF fiscal vulnerabilities. Without urgent reforms, ranging from stronger governance and cost-reflective pricing to possible privatization or public-private partnerships, the sector could continue to act as a structural drain on public finances.
For him, the sustainability of Ghana’s post-bailout recovery will depend not only on macroeconomic discipline, but on whether the SOE sector is fundamentally restructured to eliminate chronic inefficiencies and reduce the burden of state-backed liabilities.
