IMF Urges Ghana to Sustain Quarterly Electricity Tariff Adjustments
IMF calls for continued tariff reforms to improve cost recovery and protect public finances
- IMF backs quarterly tariff reviews
- Energy shortfall remains a concern
- Private-sector participation urged
The International Monetary Fund (IMF) has urged Ghana to maintain quarterly electricity tariff adjustments as part of measures to reduce fiscal risks and improve the financial sustainability of the energy sector.
The IMF made the recommendation in its 2026 Article IV Consultation and Sixth Review under the Extended Credit Facility (ECF), noting that although the energy sector’s financial shortfall declined from US$1.6 billion in 2024 to US$1.4 billion in 2025, it continues to place significant pressure on public finances.
The Fund said sustained reforms were necessary to consolidate recent gains and transform the energy sector from a source of fiscal risk into a driver of inclusive economic growth.
“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 report, the improvement in the sector’s finances was supported by electricity tariff adjustments, improved revenue collection by the Electricity Company of Ghana (ECG), reduced reliance on liquid fuels for power generation, cedi appreciation and increased payments to energy suppliers through the Cash Waterfall Mechanism.
However, the IMF projects the sector’s financial shortfall to remain high at about US$1.1 billion in 2026, mainly due to high collection and distribution losses and expensive generation contracts.
The report noted that the Public Utilities Regulatory Commission (PURC) reduced electricity tariffs by 4.81 per cent in April 2026 before raising them by 3.49 per cent in July under the quarterly tariff adjustment mechanism.
The IMF said maintaining the adjustment framework would be critical to narrowing the energy sector’s financing gap, improving cost recovery and ensuring the government’s ability to meet its obligations to independent power producers (IPPs) and fuel suppliers.
The Fund also acknowledged efforts by the government to reduce the sector’s legacy 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 government-supported payments.
The IMF said the government had secured savings through the renegotiation of power purchase agreements and legacy debt obligations while making substantial payments to energy suppliers, including those associated with the Sankofa gas project.
The Fund recommended strict adherence to quarterly tariff reviews, regular publication of audit reports on ECG’s revenue collection accounts and full implementation of the Cash Waterfall Mechanism.
It also identified increased private-sector participation in electricity distribution as a key reform needed to improve efficiency.
According to the report, a transaction adviser has been appointed to facilitate the procurement of concessionaires, with the concessions expected to be awarded by June 2027.
The IMF said greater private-sector participation could help reduce technical and commercial losses, improve revenue mobilisation and strengthen operational efficiency within the electricity distribution system.
The Fund stressed that achieving 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 sound energy sector would be essential to supporting economic growth, attracting investment and reducing pressure on Ghana’s public finances.
