Ato Forson flags energy sector as Ghana’s top economic risk

Ghana’s Finance Minister, Dr. Cassiel Ato Forson, has raised serious concerns about the country’s energy sector. He described it as the most pressing economic risk currently facing the nation.

Distribution Inefficiencies Fueling High Tariffs

Following a session on the Ghana Energy Compact at the World Bank Spring Meetings in Washington on April 22, Dr. Forson pointed out inefficiencies in the power distribution chain, particularly with the Electricity Company of Ghana (ECG). These inefficiencies, he explained, are significantly driving up tariffs for the average Ghanaian.

“The entire energy value chain is in urgent need of reform,” he posted on X (formerly Twitter). “The financial gap in the sector is nearly $2 billion, which is more than our domestic capital expenditure. ECG alone could halve this deficit if it addresses its inefficiencies.”

Government Moves to Involve Private Sector

To tackle the challenges, Dr. Forson revealed that Cabinet has already approved private sector participation in the energy sector. Furthermore, a Legislative Instrument has been submitted to Parliament. This aims to enable competitive and transparent procurement for power plants.

He added that these steps are part of broader efforts to improve sustainability and transparency within the sector.

“This is not just about fixing tariffs,” he said. “Rather, it’s about overhauling a broken system for the benefit of our people.”

Energy Compact Offers Hope

Moreover, Dr. Forson highlighted the potential of the Ghana Energy Compact under Mission 300. According to him, if implemented without delay, it could bring lasting change to the energy sector and positively affect the economy.

He stressed that time is of the essence, urging stakeholders to act quickly to avoid further economic setbacks.

Ghana Gains Momentum with IMF Agreement

Currently, Dr. Forson is leading Ghana’s delegation to the 2025 IMF and World Bank Spring Meetings. Notably, this is the first such event under the new National Democratic Congress (NDC) administration led by President John Dramani Mahama.

The meetings follow Ghana’s recent staff-level agreement with the IMF on the fourth review of its $3 billion programme. As a result, the country is expected to receive $370 million in support for its economic recovery.

Decisive Reforms Rebuild Trust

Despite the previous government missing key benchmarks, Dr. Forson noted that the current administration has taken bold and targeted actions. These include tackling the build-up of arrears, enforcing spending discipline, and improving public financial management.

“We must act swiftly to turn this around, for the well-being of our people and the stability of our economy,” he emphasized.