IMF urges Ghana to maintain quarterly electricity tariff adjustments
The International Monetary Fund (IMF) has urged Ghana to maintain its quarterly electricity tariff adjustment mechanism as part of efforts to reduce fiscal risks and strengthen the financial sustainability of the energy sector.
The sector’s financing shortfall fell from US$1.6 billion in 2024 to US$1.4 billion in 2025. Despite the improvement, the IMF said the gap remains a major burden on the country’s public finances.
In its 2026 Article IV Consultation and Sixth Review under the Extended Credit Facility (ECF), the Fund said sustained reforms would be necessary to consolidate the progress made and address the sector’s longstanding financial challenges.
“Despite progress, challenges remain in transforming the sector from a source of fiscal risks to a driver of inclusive growth,” the IMF said.
According to the Fund, the improvement in the sector’s financial position was supported by electricity tariff adjustments, improved revenue collection by the Electricity Company of Ghana (ECG), lower reliance on liquid fuels for power generation, the appreciation of the cedi and increased payments to energy suppliers through the Cash Waterfall Mechanism.
However, the IMF projects the sector’s financing shortfall to remain significant at about US$1.1 billion in 2026, largely due to high collection and distribution losses as well as expensive power generation contracts.
The report noted that the Public Utilities Regulatory Commission (PURC) reduced electricity tariffs by 4.81% in April 2026 before raising them by 3.49% in July 2026 under the quarterly tariff adjustment framework.
The IMF said keeping the tariff adjustment mechanism in place would be crucial to narrowing the energy sector’s financing gap, improving cost recovery and ensuring that the sector can meet its obligations to independent power producers (IPPs) and fuel suppliers.
The Fund also acknowledged government’s efforts to tackle the sector’s accumulated debts.
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, following debt renegotiations and payments made through government interventions.
The IMF said the government had secured savings through the renegotiation of power purchase agreements and legacy debt obligations, while also making substantial payments to energy suppliers, including those associated with the Sankofa gas project.
To sustain the progress, the Fund recommended strict compliance with 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 greater private-sector participation in electricity distribution as an important component of the reform agenda.
It said a transaction adviser had been appointed to oversee the procurement of concessionaires, with the concessions expected to be awarded by June 2027.
According to the Fund, private-sector involvement could help reduce technical and commercial losses, improve revenue mobilisation and enhance operational efficiency across the electricity distribution system.
The IMF stressed that building a financially sustainable energy sector would require continued policy discipline and reforms beyond the current IMF-supported programme.
It added that a more efficient and financially stable energy sector would be critical to supporting economic growth, attracting investment and easing pressure on Ghana’s public finances.
