The International Monetary Fund (IMF) has urged Ghana to sustain quarterly electricity tariff adjustments. This measure aims to reduce fiscal risks in the nation's energy sector. The sector's shortfall declined to US$1.4 billion in 2025 from US$1.6 billion in 2024, but it remains a significant pressure on public finances.
This recommendation comes from the IMF's 2026 Article IV Consultation and Sixth Review under the Extended Credit Facility (ECF). The IMF stated that sustained reforms are necessary to consolidate gains and improve the energy sector's financial sustainability. The Fund noted that challenges persist in transforming the sector from a source of fiscal risk into a driver of inclusive growth for Ghana.
Ghana's energy sector has historically faced significant financial challenges, often requiring government intervention. The quarterly tariff adjustment mechanism, implemented by the Public Utilities Regulatory Commission (PURC), is a key policy tool. This mechanism helps align electricity prices with generation costs. This approach aims to reduce the financial burden on the state and ensure the viability of power producers. The government's efforts to renegotiate power purchase agreements and manage legacy debts have also contributed to recent improvements.
The IMF attributed the recent improvement in the energy sector's financial health to several factors. These include tariff adjustments, enhanced revenue collection by the Electricity Company of Ghana (ECG), and reduced use of expensive liquid fuels for power generation. The appreciation of the Ghana cedi and increased payments to energy suppliers through the Cash Waterfall Mechanism also played a role. 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 2026.
Maintaining the tariff adjustment framework is critical for narrowing the energy sector financing gap. It also improves cost recovery and ensures the sector's ability to meet obligations to independent power producers (IPPs) and fuel suppliers. Net payables owed to IPPs and fuel suppliers declined to US$1.7 billion by March 2026 from US$2.1 billion at the end of 2024. This reduction followed debt renegotiations and payments made through government interventions.
The IMF recommends strict adherence to quarterly tariff reviews. It also suggests regular publication of audit reports on ECG's revenue collection accounts. Full implementation of the Cash Waterfall Mechanism is also crucial. These measures will enhance transparency and accountability within the sector. Increased private-sector participation in electricity distribution is another key reform identified by the IMF. A transaction adviser has been appointed to facilitate the procurement of concessionaires, with concessions expected by June 2027.
Private-sector involvement is expected to reduce technical and commercial losses. It will also improve revenue mobilisation and strengthen operational efficiency within the power distribution system. Achieving a financially sustainable energy sector requires continued policy discipline and reforms beyond the current IMF-supported programme. A more efficient and financially sound energy sector is necessary to support economic growth, attract investment, and reduce pressure on public finances in Ghana.