The International Monetary Fund (IMF) has reported that reduced direct government payments to power producers have offset gains from improved revenue collection at the Electricity Company of Ghana (ECG).

In its latest review report, the Fund said the central government’s reduction in financial interventions had overshadowed a “remarkable surge” in the utility’s operational performance.

It reported that in the first half of 2025, the ECG distributed US$308 million to Independent Power Producers (IPPs) through the Cash Waterfall Mechanism, nearly matching the US$325 million paid in the whole of 2024.

However, the IMF noted that the progress was eclipsed by a US$71 million increase in net payables to IPPs over the same period, bringing the total to US$1.2 billion by the end of June.

The increase was attributed to the reduction in direct government payments, which created a funding gap that improved ECG performance could not fill.

The Fund said the debt continued to rise despite the passage of a fuel levy last year, which was intended to clear legacy debts, finance fuel procurement and support fiscal stabilisation.

It reported that while debts to fuel suppliers declined by US$124 million, they remained high at US$830 million.

The IMF stated that although ECG now covered 48 per cent of its bills, up from 11 per cent in 2024, the government still had to assume a shortfall of more than US$500 million in the first nine months of 2025 for legacy debts and fuel costs.

To address the legacy debt, the government was reported to have reached an agreement with nine IPPs in the third quarter of 2025, involving creditor haircuts of between 15 per cent and 30 per cent, alongside upfront payments of US$300 million.

The remaining balances were scheduled to be settled between 2026 and 2029, while revised Power Purchase Agreements were ratified by Parliament in November 2025 to reduce future generation costs.

The government has allocated GH¢15 billion in the 2026 Budget to cover projected energy sector shortfalls in addition to legacy debt payments.

The IMF noted that although renegotiated PPAs and reduced reliance on expensive liquid fuels had placed Ghana on a positive path, further measures were required to restore ECG’s financial sustainability and reduce persistent fiscal risks.