Major gains achieved in energy sector reforms
Ghana’s efforts to fix its troubled energy sector are yielding tangible results, with the government successfully renegotiating legacy arrears and power purchase agreements (PPAs) with most Independent Power Producers (IPPs), according to the International Monetary Fund (IMF).
The IMF, in its assessment following the conclusion of the Fifth Review Mission under Ghana’s three-year Extended Credit Facility (ECF), said these reforms mark a significant turning point in one of the country’s most fiscally challenging sectors.
“The authorities made notable strides in addressing long-standing challenges in the energy sector. The government has renegotiated legacy arrears and power purchasing agreements with most independent power producers.
“Tariff adjustments are now conducted quarterly, helping better reflect costs. Payments through the Cash Waterfall Mechanism have also increased significantly,” said Ruben Atoyan, Head of the IMF Mission to Ghana.
The Fund credited these steps with restoring financial discipline and reducing fiscal pressures that previously stemmed from ballooning energy sector debts. The renegotiated IPP contracts and improved payments through the Cash Waterfall Mechanism are expected to prevent the accumulation of new arrears, while stabilising energy supply and enhancing investor confidence.
The IMF noted that Ghana’s broader macroeconomic recovery is also strengthening. “Macroeconomic stabilisation is taking root. Growth in the first half of 2025 was stronger than anticipated, underpinned by robust services activity and strong agricultural output,” Mr Atoyan stressed.
He said Ghana’s international reserves accumulation continues to exceed programme targets, while the cedi appreciated significantly in the first half of the year.
The report also highlighted an improvement in fiscal performance, with the government achieving a primary surplus of 1.1 per cent of GDP in the first eight months of 2025 and on track to meet the 1.5 per cent target by year-end.
The IMF further praised Ghana’s commitment to aligning the upcoming 2026 budget with the Fiscal Responsibility Framework to ensure sustained discipline.
On debt restructuring, the Fund confirmed that Ghana has reached bilateral agreements with five countries under the G20 Common Framework, while negotiations with commercial creditors are progressing.
It said Ghana’s debt outlook has “improved markedly”, supported by a stronger macroeconomic environment and continued fiscal prudence.
The IMF delegation held discussions with Finance Minister Dr Cassiel Ato Forson, Bank of Ghana Governor Dr Johnson Asiama, and other senior officials during the mission.
“The IMF team would like to express its gratitude to the Ghanaian authorities and other counterparts for their warm hospitality and continued open and constructive engagement,” Mr Atoyan added.
