Energy Sector Still Ghana’s Biggest Fiscal Threat Despite Economic Recovery – Deloitte

Ghana’s improving macroeconomic outlook could be undermined if long-standing financial challenges in the energy sector are not addressed, according to Deloitte, which has identified the sector as the country’s most significant remaining fiscal risk following the 2026 Mid-Year Budget Review.

In its assessment of the review, the professional services firm acknowledged the government’s progress in restoring macroeconomic stability but warned that the financial position of the Electricity Company of Ghana (ECG) and other state-owned energy enterprises continues to pose a serious threat to public finances.

Deloitte said that while the Finance Ministry has rightly prioritised reforms in the energy sector, unresolved operational inefficiencies and mounting liabilities could eventually spill onto the government’s balance sheet, reversing gains made in debt sustainability.

“Without meaningful reforms, losses within the sector could eventually migrate onto the government’s balance sheet and undermine hard-won gains in debt sustainability,” the firm cautioned.

The report urged the government to accelerate and consistently implement reforms aimed at improving operational efficiency, strengthening financial management and restoring the commercial viability of the energy sector.

Debt restructuring nearing completion

Deloitte also noted that Ghana’s sovereign debt restructuring programme is approaching completion, marking another milestone in the country’s fiscal recovery. However, it stressed that liabilities accumulated within the energy sector, particularly by state-owned enterprises, remain a significant source of fiscal vulnerability.

The firm welcomed Finance Minister Dr. Cassiel Ato Forson’s commitment to tightening public financial management controls, enforcing stricter expenditure commitments and advancing structural reforms within the energy sector.

Caution against short-term borrowing

While recognising domestic borrowing as an important financing tool, Deloitte advised government to avoid excessive dependence on short-term domestic debt, warning that it could increase refinancing risks and raise future interest costs.

The firm argued that maintaining prudent debt management will be essential to preserving the gains achieved under the country’s fiscal consolidation programme.

Debt burden eases

Deloitte highlighted a significant improvement in Ghana’s debt servicing burden, noting that debt service as a proportion of domestic revenue declined from 55.7% in 2022 to 28.6% by mid-2026.

The reduction, it said, creates additional fiscal space for government to increase investment in critical sectors such as healthcare, education, infrastructure and social development rather than allocating a large share of revenue to debt repayments.

Overall, Deloitte concluded that Ghana has made substantial progress since the debt crisis, with stronger economic growth, declining inflation and improved fiscal discipline providing a more stable macroeconomic environment.

However, it cautioned that sustaining these gains will depend on decisive reforms in the energy sector, continued fiscal discipline and prudent debt management to prevent renewed pressure on public finances.