Ghana's improving macroeconomic outlook faces significant risk from unresolved financial and operational weaknesses in the energy sector. Deloitte, a professional services firm, has identified this as the country's most significant remaining fiscal threat. This warning comes despite Ghana's progress in restoring economic stability.
Mounting liabilities within the Electricity Company of Ghana (ECG) and other state-owned energy enterprises could transfer to the government’s balance sheet. Such an outcome would weaken public finances. It could also reverse some progress achieved through fiscal consolidation and sovereign debt restructuring efforts.
This situation creates contingent liabilities, which are obligations not initially direct public debt but can become fiscal costs. This happens when state-owned institutions fail to meet their financial commitments. The energy sector's ongoing issues highlight a tension between Ghana's improving economic indicators and embedded financial vulnerabilities.
Deloitte cautioned that without meaningful reforms, losses could migrate onto the government’s balance sheet. This would undermine hard-won gains in debt sustainability. The government has recorded stronger economic growth, declining inflation, and better fiscal discipline following a recent debt crisis.
However, the energy sector continues to generate liabilities through operational inefficiencies and revenue shortfalls. Some state-owned enterprises cannot meet their financial obligations. When these companies cannot pay power producers, fuel suppliers, or lenders, the central government may ultimately need to intervene.
Deloitte welcomed the Finance Ministry’s decision to prioritise structural reforms in the sector. However, the firm stressed that implementation must be accelerated and sustained. They called for measures to improve operational efficiency, strengthen financial management, and restore commercial viability.
For ECG, policy challenges include improving revenue collection and reducing commercial and technical losses. Ensuring electricity supplied to customers is properly metered and paid for is also crucial. Weak collection creates financial problems across the entire electricity value chain.
When distributors fail to recover sufficient revenue, they may be unable to pay generators and fuel suppliers. This results in arrears that eventually require government support. The sector’s financial position also affects Ghana’s broader investment climate.
Reliable and competitively priced electricity is critical for manufacturing, mining, services, and household welfare. Persistent inefficiencies can raise production costs, weaken business competitiveness, and discourage private investment. Deloitte’s assessment suggests energy reform is not just a fiscal issue but also essential for sustaining economic growth.
The firm noted that Ghana’s sovereign debt restructuring programme was nearing completion. This marks an important milestone in the country’s recovery. However, completing the restructuring will not eliminate the risk of new debt accumulation.
This risk persists if unresolved losses in state-owned enterprises continue to demand public funds. Deloitte welcomed Finance Minister Dr. Cassiel Ato Forson’s commitment to strengthening public financial management. This includes enforcing tighter expenditure controls and advancing reforms in the energy sector.
The firm argued that continued discipline would be required to prevent commitments from being undertaken without sufficient budgetary provision. Deloitte also advised the government to manage domestic borrowing carefully. Excessive dependence on short-term instruments could increase refinancing risk and raise future interest costs.
Short-term borrowing requires the government to return frequently to the market to repay or roll over maturing obligations. This can expose public finances to sudden increases in interest rates or reduced investor demand. Prudent debt management will be necessary to preserve gains from the fiscal consolidation programme.
Deloitte highlighted a significant reduction in Ghana’s debt-servicing burden. Debt service as a share of domestic revenue declined from 55.70% in 2022 to 28.60% by mid-2026. This improvement means a smaller proportion of government revenue is used for debt repayments. This potentially creates additional fiscal space for healthcare, education, infrastructure, and social protection. However, that space could be eroded if the government is required to absorb energy sector losses.