Gov’t reform efforts yet to translate into improved SOEs financial performance – IMF

The International Monetary Fund (IMF) has noted that the reform efforts undertaken by the government over the past decade have not yet led to improved financial performance of State-Owned Enterprises (SOEs) in Ghana. The persistent structural weaknesses continue to pose challenges, particularly in the energy and commodity sectors, where SOEs are the primary contributors to fiscal strain. These difficulties arise from factors such as arrears accumulation, liquidity constraints, and non-cost reflective tariffs.

According to the IMF's Technical Assistance Report titled "Advancing SOE Fiscal Risks Management, Financial Oversight, Governance and Investment Implementation," while SOE revenues have increased significantly over time – from GH¢19 billion in 2015 to GH¢133 billion in 2024 – this growth has not resulted in overall enhanced SOE performance.

Despite many entities operating at a profit or near break-even, a handful of large SOEs continue to generate net losses that have fluctuated around 1.0% of the country's GDP from 2016 to 2024. A significant portion of this issue can be attributed to financing costs associated with foreign currency-denominated debts.

The IMF acknowledges the increased role of the Ministry of Finance (MOF) in financial oversight and the strengthened fiscal risk assessments. However, they point out challenges in the timeliness, data completeness, and integration of these fiscal risk assessment processes. The MOF's fiscal risk reports, the Fiscal Risk Statement (FRS) and the SOE Fiscal Risk Report, often present redundant analyses, with the latter experiencing significant data lags and a lack of focus on macro-critical enterprises.

Moreover, the IMF highlights the complex nature of fiscal risk assessment due to insufficient information on quasi-fiscal activities (QFAs) carried out by SOEs, which further obscures the true fiscal cost of SOE operations. The IMF also notes that responsibility for SOE financial oversight is divided between the MOF and the State Interest and Governance Authority (SIGA), leading to overlapping functions and fragmented reporting, which in turn reduces the efficiency and effectiveness of fiscal risk management.

Regarding ownership and governance, the IMF reaffirms that Ghana has made notable progress in establishing a legislative framework. However, implementation gaps persist, particularly in the areas of board and CEO appointments, which remain highly politicized with many board seats occupied by active politicians and high-level officials, undermining the boards' independence and professionalism.

The IMF also expresses concern over the uneven compliance with reporting, audit, and performance contracting requirements, citing significant irregularities in procurement, financial management, and audit follow-up noted by the Auditor General.