The International Monetary Fund (IMF) has called on Ghana to maintain quarterly electricity tariff adjustments to improve cost recovery and address persistent financial challenges in the energy sector.
Despite an improvement in the sector’s financial position, the IMF said the energy shortfall remained substantial, declining from US$1.6 billion in 2024 to US$1.4 billion in 2025.
The Fund projects the shortfall to narrow further to about US$1.1 billion in 2026, but warned that high collection and distribution losses, coupled with expensive power generation contracts, continue to pose significant fiscal risks.
In its 2026 Article IV Consultation and Sixth Review under the Extended Credit Facility (ECF), the IMF said Ghana must sustain reforms to consolidate recent gains and put the energy sector on a financially sustainable path.
“Despite progress, challenges remain in transforming the sector from a source of fiscal risks to a driver of inclusive growth,” the IMF said.
The Fund attributed the reduction in the sector shortfall to electricity tariff adjustments, improved revenue collection by the Electricity Company of Ghana (ECG), reduced reliance on liquid fuels for power generation, appreciation of the cedi and increased payments to energy suppliers through the Cash Waterfall Mechanism.
The IMF noted that the Public Utilities Regulatory Commission (PURC) reduced electricity tariffs by 4.81 per cent in April 2026 before increasing them by 3.49 per cent in July under the quarterly tariff adjustment mechanism.
It stressed that maintaining the adjustment framework would be critical to improving cost recovery, narrowing the sector’s financing gap and strengthening its capacity to meet payment obligations to independent power producers (IPPs) and fuel suppliers.
The Fund also acknowledged progress in addressing legacy debts owed to energy-sector suppliers.
Net payables to IPPs and fuel suppliers fell from US$2.1 billion at the end of 2024 to US$1.7 billion by March 2026, supported by debt renegotiations and payments made through government interventions.
According to the IMF, the government secured savings from the renegotiation of power purchase agreements and legacy debt obligations while making substantial payments to energy suppliers, including obligations linked to the Sankofa gas project.
However, the Fund said further reforms were necessary to prevent the sector from continuing to drain public resources.
It 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.
The IMF also identified increased private-sector participation in electricity distribution as a critical component of the reform agenda.
According to the report, a transaction adviser has been appointed to facilitate the procurement of concessionaires, with concessions expected to be awarded by June 2027.
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The Fund said greater private-sector participation could help reduce technical and commercial losses, strengthen revenue mobilisation and improve operational efficiency across the electricity distribution system.
It stressed that achieving a financially sustainable energy sector would require sustained policy discipline and reforms extending beyond the current IMF-supported programme.
The IMF said a more efficient and financially viable power sector was essential to support economic growth, attract investment and reduce pressure on Ghana’s public finances.
