IMF urges Ghana to sustain quarterly electricity tariff adjustments

The International Monetary Fund (IMF) has called on Ghana to maintain quarterly electricity tariff adjustments as part of efforts to mitigate fiscal risks in the energy sector. While the sector shortfall decreased from US$1.6 billion in 2024 to US$1.4 billion in 2025, it still poses a significant burden on public finances, according to the IMF's 2026 Article IV Consultation and Sixth Review under the Extended Credit Facility (ECF).

The IMF stressed that ongoing reforms were necessary to solidify recent advancements and enhance the sector's financial sustainability. Progress has been made, including tariff adjustments, improved revenue collection by the Electricity Company of Ghana (ECG), decreased reliance on liquid fuels for power generation, an appreciation of the cedi, and higher payments to energy suppliers through the Cash Waterfall Mechanism.

However, the IMF projected that the sector's shortfall would amount to approximately US$1.1 billion in 2026, largely due to significant collection and distribution losses and expensive generation contracts. The Public Utilities Regulatory Commission (PURC) implemented a 4.81% tariff reduction in April 2026, followed by a 3.49% increase in July 2026, as part of the quarterly tariff adjustment mechanism.

The IMF emphasized that adhering to this framework is crucial for narrowing the energy sector financing gap, enhancing cost recovery, and ensuring the sector's capacity to fulfill obligations to independent power producers (IPPs) and fuel suppliers.

The IMF also recognized the government's efforts to reduce legacy debts in the sector, noting that net payables owed to IPPs and fuel suppliers fell to US$1.7 billion by March 2026 from US$2.1 billion at the end of 2024, following debt renegotiations and payments facilitated by government interventions. The Fund suggested strict adherence to quarterly tariff reviews, regular publication of audit reports on ECG's revenue collection accounts, and the full implementation of the Cash Waterfall Mechanism.

Additionally, the IMF identified increased private-sector involvement in electricity distribution as a key reform. The Fund appointed a transaction adviser to assist in the procurement of concessionaires, with the expectation of awarding concessions by June 2027. The IMF believes that private-sector participation will lead to a reduction in technical and commercial losses, improved revenue mobilization, and enhanced operational efficiency within the power distribution system.

The IMF underlined that achieving a financially sustainable energy sector necessitates ongoing policy discipline and reforms beyond the current IMF-supported program. The Fund stressed that a more efficient and financially sound energy sector is vital for supporting economic growth, attracting investment, and reducing pressure on public finances.