IMF pushes government to privatise ECG operations amid energy sector crisis

The International Monetary Fund has urged Ghana to accelerate private sector participation in the operations of the Electricity Company of Ghana (ECG), warning that long-standing inefficiencies in the energy sector continue to pose risks to public finances and overall economic stability.

The call was made during discussions between an IMF staff mission led by Ruben Atoyan and Ghanaian authorities in Accra from April 29 to May 15, 2026, as part of the sixth and final review of Ghana’s Extended Credit Facility programme.

In its end-of-mission statement issued on Friday, the IMF said stronger reforms in both the energy and cocoa sectors were essential to safeguarding public resources and sustaining Ghana’s economic recovery.

It specifically recommended addressing distribution and revenue collection losses at ECG, including finalising private sector participation in electricity distribution, improving payment discipline, clearing legacy arrears, and reducing generation costs.

The Fund noted that ECG’s operational inefficiencies and mounting debts have long been a major fiscal burden on the state, contributing to recurrent financial strain in the energy sector.

Despite these challenges, the IMF acknowledged that Ghana’s economic stabilisation programme has delivered significant gains. It pointed to declining inflation, improved international reserves, and growing confidence in the Ghanaian cedi.

The Fund also noted that fiscal performance has improved substantially, while economic growth in 2025 exceeded expectations, supported by broad-based activity and strong gold export earnings.

However, it cautioned that sustaining the recovery would depend on continued reform implementation and strict fiscal discipline, particularly in a volatile global environment.

“The global environment remains uncertain,” the IMF warned, citing risks such as rising energy, food, and fertiliser prices linked to geopolitical tensions, including conflicts in the Middle East, which could affect Ghana’s economic outlook.

The IMF further announced that it had reached a staff-level agreement with Ghana on a new non-financing 36-month Policy Coordination Instrument (PCI), which will guide post-programme reforms after the current bailout arrangement ends.

The new framework is expected to focus on maintaining fiscal discipline, ensuring debt sustainability, strengthening oversight of state-owned enterprises, and promoting inclusive economic growth.

The Fund also emphasised the importance of transparency in quasi-fiscal operations, particularly at the Bank of Ghana, warning that losses linked to the Domestic Gold Purchase Programme highlight risks that could weaken the central bank’s balance sheet if not properly managed.

In addition, the IMF urged reforms in the cocoa sector to improve efficiency and ensure the long-term sustainability of the Ghana Cocoa Board (COCOBOD), which remains a critical institution in Ghana’s agricultural export economy.

While expressing concern over structural weaknesses in key sectors, the IMF commended Ghana for what it described as “substantial stabilisation gains” and praised the resilience of the Ghanaian economy and its people under the reform programme.

It also warned that avoiding past policy setbacks would be essential to preserving and consolidating the economic progress achieved so far under the IMF-supported programme.