Ghana's Finance Minister, Dr. Cassiel Ato Forson, has reaffirmed the government's commitment to addressing energy sector fiscal risks, a persistent challenge hindering the country's economic growth. Despite these challenges, the Minister expressed optimism about the progress made so far, highlighting measures implemented to mitigate the energy sector shortfall. Speaking at a joint press conference with the Ministry of Finance, Bank of Ghana, and the International Monetary Fund (IMF), Dr. Forson emphasized the government's dedication to fulfilling its obligations under the IMF-supported program.
Key Measures to Address Energy Sector Challenges
To tackle the energy sector's fiscal risks, the government has introduced several key measures:
- Single Account Mechanism: The government has operationalized the single account mechanism to streamline financial transactions and improve accountability.
- Cash Waterfall Mechanism: The Cash Waterfall Mechanism is being implemented according to guidelines to guarantee minimum contractual payments to Independent Power Producers (IPPs).
- Audit of Payables and Commitments: The Auditor General, along with two international audit firms, has been commissioned to audit payables and commitments, validating their legitimacy and providing recommendations for corrective measures.
Progress Under the IMF-Supported Program
The IMF-supported program has seen significant progress, with the government working tirelessly to reverse breaches of structural benchmarks and quantitative targets. Some notable achievements include ¹ ²:
- Migration to GIFMIS: 549 Ministries, Departments, and Agencies (MDAs) and Metropolitan, Municipal, and District Assemblies (MMDAs) spending units accounts have been migrated into the Ghana Integrated Financial Management Information System (GIFMIS).
- Publication of Validation Report: The Public Utilities Regulatory Commission (PURC) has published the validation report of the Electricity Company of Ghana (ECG) revenue/collection accounts audit for 2023 Q4 and the full 2024.
- Quarterly Tariff Adjustments: The PURC has implemented quarterly tariff adjustments to satisfy the Structural Benchmark conditionality under the program.
Commitment to Fiscal Discipline
Dr. Forson emphasized the government's commitment to fiscal discipline, highlighting measures to strengthen the spending commitment control system, eliminate the accumulation of payables, and enhance budget credibility. These measures include ²:
- Amendment to Procurement Act: An amendment to the Procurement Act ensures that the issuance of commitment authorization by the Minister for Finance is a prerequisite for all central government procurement.
- Amendment to PFM Act: The Public Financial Management (PFM) Act has been amended to introduce a debt rule to reduce the debt-to-GDP ratio to 45% by 2035 and an operational rule to post an annual primary surplus on a commitment basis of at least 1.5% of GDP.
- Establishment of Compliance Desk: A Compliance Desk has been established at the Ministry of Finance to monitor MDAs' compliance with their fiscal commitments under the PFM Act.
IMF Support and Disbursement
The successful conclusion of the 4th Review of the IMF-Supported Programme has paved the way for the immediate disbursement of the 5th Tranche of $370 million, bringing the total disbursements under the program to $2.3 billion. Dr. Forson expressed gratitude to the IMF Mission Team for their continued support and professionalism, emphasizing the government's commitment to implementing all commitments under the program.
Way Forward
As Ghana continues to navigate its economic challenges, the government remains committed to restoring macroeconomic stability, promoting inclusive growth, and securing a brighter future for its citizens. With the IMF's support, Ghana is poised to overcome its energy sector challenges and achieve sustainable economic growth. Dr. Forson's assurance to personally lead the charge in implementing the government's commitments under the IMF-supported program underscores the government's determination to drive economic progress.
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